STATE OF NEW HAMPSHIRE

HILLSBOROUGH, SS SUPERIOR COURTNORTHERN DISTRICT

Case No. 216-2013-CV-529

R. STUART WALLACE and ETHAN WALLACE ET AL.

v.

STATE OF NEW HAMPSHIRE.and the

NEW HAMPSHIRE DEPARTMENT OF HEALTH AND HUMAN SERVICES andNICHOLAS TOUMPAS, COMMISSIONER OF THE NEW HAMPSHIRE DEPARTMENT

OF HEALTH AND HUMAN, SERVICES

PLAINTIFFS' SUPPLEMENTAL MEMORANDUM OF LAW IN SUPPORTOF MOTION FOR SUMMARY JUDGMENT, MOTION FOR SUMMARY JUDGMENT

ALTERNATIVE, TO DISMISS THOSE COUNTS. FOR FAILURE TO STATE A CLAIM

NOW COME the Plaintiffs, R. Stuart Wallace and Ethan Wallace et al., by and through

their attorneys, Devine, Millimet and Branch, P.A. and John Macintosh, Esq., P.C., and

respectfully file this Supplemental Memorandum of Law in Support of Motion for Summary

Judgment, Motion for Summary Judgment on All Counts, and Objection to State's Motion to

Strike Counts II, III, and IV of Plaintiffs' Amended Complaint, or in the Alternative, to Dismiss

Those Counts for Failure to State a Claim, and in support thereof state:

I. Introduction and Background

1. Plaintiffs initiated this action by Complaint dated August 15, 2013 seeking a

declaratory judgment that SB 147, Chapter 125, Laws of 2011, does not allow the Department of

Health and Human Services ("DHHS") to plan for or attempt to force long-term care services for

the developmentally disabled and acquired brain disorder population into any Medicaid managed

care program.

2. The parties subsequently filed cross-motions for summary judgment.

3. On May 22, 2014, this Court issued an Order on the parties' cross-motions for

summary judgment ultimately concluding that "plaintiffs' cause of action is currently barred by

the doctrine of sovereign immunity." Order at 4. The Court, however, gave the Plaintiffs leave

to amend the complaint "to correct the deficiencies." Id. Pursuant to the May 22"d Order, the

Court "defer[red] ruling on the issues of statutory interpretation raised in the parties' motions for

summary judgment until receipt of the amended complaint." Order at 5.

4. Consistent with this Court's May 22nd Order, the Plaintiffs filed an amended

complaint on June 23, 2014. The amended complaint rested on the very same facts as the

original complaint, but named an additional defendant and alleged three new causes of action.

More specifically, the Plaintiffs: (1) named DHHS Commissioner Nicholas Toumpas as an

individual defendant; (2) asserted a new count (Count II) alleging a constitutional violation of the

separation of powers doctrine; (3) asserted a new count (Count III) alleging breach of contract;

and (4) asserted a new count (Count IV) for breach of the Plaintiffs' statutory rights guaranteed

by the federal Rehabilitation Act and RSA chapter 171-A.

5. The State has now filed a supplemental memorandum of law concerning Count I

and a motion to strike or dismiss the remaining counts. As set forth below, sovereign immunity

is no bar to resolving any of the counts, the State's request to strike or dismiss the newly asserted

counts lacks merit, and the Plaintiffs are entitled to summary judgment on the statutory

interpretation issues deferred by this Court.

II. Sovereign immunity does not bar anv count.

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6. The State offers little argument or analysis concerning its sovereign immunity

defense, discussing it only with respect to Count I, and restating its earlier immunity analysis

without addressing. the fact. that the Plaintiffs have amended this action to now include the non-

immune DHHS Commissioner as an additional defendant.

7. A body of well-established decisional law holds that plaintiffs may pursue a

declaratory judgment claim against an individual state employee exceeding the bounds of his or

her authority, even if the State itself enjoys sovereign immunity. As the Supreme Caurt of

Connecticut has explained, an exception to sovereign immunity exists for "an action for

declaratory or injunctive relief [alleging] the state officer or officers against whom such relief is

sought acted in excess of statutory authority." Miller v. Egan, 828 A.2d 549, 559 (Conn. 2003).

"Because a court may tailor declaratory and injunctive relief so as to minimize any [interference

with the performance of their functions] ..., actions that seek injunctive or declaratory relief

against a state officer acting in excess of statutory authority or pursuant to an unconstitutional

statute do not conflict with the policies underlying the doctrine of sovereign immunity." Id.; see

also Dan Nelson, Automotive, Inc. v. Viken, 706 N.W.2d 239, 249-50 (S.D. 2005); Cobb v.

Harrington, 190 S.W.2d 709, 712 (Tex. 1945); Berlowitz v. Roach, 30 N.W.2d 256, 258 (Wis.

1947); Ex parte State Dept of Human Res., 950 So.2d 1165, 1170-71 (Ala. Civ. App. 2004);

Bunis v. Conway, 234 N.Y.S.2d 435, 437 (1962).

8. In Conway v. New Hampshire Water Resources Board, 89 N.H. 346, 199 A. 83,

86 (1938), New H~tnpshire expressly recognized this exception to sovereign immunity -for

actions against State officers acting beyond their authority: "While the state cannot be sued

without its consent, ...when the alleged or threatened wrong, though colorably the state's and in

its name, is only that of its officials or agents, equity is deemed to have power to grant relief."

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The Court has subsequently applied the immunity exception in actions against a State officer

seeking declaratory judgment for actions to remedy unauthorized conduct by that individual. See

O'Neil v. Thomson, 114 N.H. 155, 159 (1974) ("Nor does this petition violate the doctrine of

sovereign immunity as it is not an action against the State but rather a proceeding to prevent the

Governor from enforcing Executive orders which are claimed to be beyond his powers to

promulgate.").

9. Count I alleges the very type of non-immune claim against the DHHS

Commissioner contemplated in these cases: declaratory judgment concerning conduct by the

individual tasked with administering a statute alleged to be acting in excess of his statutory

authority. The amended complaint alleges that the DHHS Commissioner "continues to assert

that it is planning for the implementation of Medicaid managed care to the developmentally

disabled and ABD population in Step 2." First Amended Complaint ¶ 51. The amended

complaint further alleges that "DHHS at or under the direction of its Commissioner also

wrongly continues to insist that SB 147 allows it to impose its Medicaid managed care program

on long-term care services and supports for the developmentally disabled and ABD Medicaid

population." Id. Thus, in Count I the Plaintiffs seek a declaratory judgment that " SB 147,

Chapter 125, Laws of 2011, (RSA 126-A:5, XIX) does not allow DHHS or its Commissioner to

plan for or attempt to force long-term care services for the developmentally disabled and

acquired brain disorder population into any Medicaid managed care program." Id. ¶ 55.

10. In light of the foregoing, sovereign immunity is no bar to reaching the merits of

the statutory interpretation issues presented within Count I. Likewise, Counts II, III and IV also

allege causes of action against the DHHS Commissioner which are not barred by sovereign

immunity for the same reason.

~~

11. Furthermore, with respect to Count II (separation of powers), Count III (breach of

contract) and Count IV (federal Rehabilitation Act and RSA chapter 171-A), the State has

asserted no sovereign immunity defense. Nor could the State do so in view of well-established

law. As this Court observed, sovereign immunity does not bar constitutional claims such as the

separation of powers claim in Count II. Order at 2 (citing and discussing Grinnell v. State, 121

N.H. 823, 825 (1981) and Lorenz v. New Hampshire Administrative Office of the Courts, 152

N.H. 632, 634 (2005)). With respect to Count III, the State has expressly waived sovereign

immunity for contract claims. See RSA 491:8. Similarly, regarding Count IV, the State has no

sovereign .immunity for violations of the federal Rehabilitation Act. See 42 U.S.C. § 2000d-

7(a)(1); Diaz-Fonseca v. Puerto Rico, 451 F.3d 13, 33 (1st Cir. 2006); Nieves-Marquez v. Puerto

Rico, 353 F.3d 108, 127-30 (1st Cir. 2003). Likewise, the State has waived sovereign immunity

for claims enforcing RSA chapter 171-A. See State v. B~ousseau, 124 N.H. 184, 191 (1983).

12. For all these reasons, sovereign immunity is no longer a bar to the declaratory

judgment Plaintiffs seek in Counts I, II, III and IV.

III. The State identifies no basis to strike the newly asserted counts.

13. Perhaps recognizing that Plaintiffs have now alleged claims clearly overcoming

the sovereign immunity defense, the State, as a continuation of its efforts to defer or avoid

resolution of this matter on the merits, alternatively asks this Court to strike and/or dismiss the

newly added claims asserted in Counts II, III and IV. The only argument the State advances is

that these new counts somehow exceed the scope of leave to amend granted by this Court. That

argument strains credibility.

14. In the May 22"d Order, this Court: (1) observed the State is not immune to claims

alleging unconstitutional actions, Order at 2 (citing and discussing Grinnell v. State, 121 N.H

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823, 825 (1981) and Lorenz v. New Hampshire Administrative Office of the Courts, 152 N.H.

632, 634 (2005)); (2) rejected the Plaintiffs' argument that the declaratory judgment statute, RSA

491:22, constitutes a waiver of sovereign immunity, Order at 2-3; (3) agreed that RSA 171-A:13

effectuates a waiver of sovereign immunity, but concluded "that plaintiffs have not brought an

action under RSA 171-A:13," Order at 3-4; and (4) disagreed that sovereign immunity did not

apply because the Plaintiffs are not seeking monetary damages, Order at 4.

15. After making these observations and reaching these conclusions, the Court

"grant[ed] plaintiffs leave to amend their complaint to correct the deficiencies outlined above."

Order at 4 (emphasis added). The Order, therefore, plainly invited the' Plaintiffs to allege causes

of action which, as pointed out in this Court's analysis, were not barred by State sovereign

immunity. Toward that end, the Court "defer[red] ruling on the issues of statutory

interpretation raised in the parties' motions for summary judgment until receipt of the amended

complaint," Order at 5 (emphasis added), again contemplating broadly that the issues of statutory

interpretation could come up in the context of additional causes of action.

16. The State incorrectly seizes on this. Court's citation to ERG, Inc. v. Banes, 137

N.H. 186, 189 (1993) in the May 22"d Order as a basis to narrow the scope of leave to amend

given the Plaintiffs. In doing so the State simply ignores the plain text of this Court's Order,

which granted leave "to correct the deficiencies outlined above." In other words, this Court did

not limit the Plaintiffs to amending only the factual allegations in support of Count I of the

Complaint, which is the State's improper reading of this Court's May 22°d Order.

17. Additionally, the State misrepresents the holding and applicability of the Coan

case following ERG. In ERG, the New Hampshire Supreme Court held that a plaintiff deserves a

second chance "to state his case" before a dismissal may have preclusive effect. In Coan v. New

Hampshire of Dept. of Environmental Services, 161 N.H. 1 (2010), the New Hampshire Supreme

Court affirmed the denial of a motion to amend, holding that ERG "does not grant the plaintiff an

absolute right to plead an entirely new cause of action." Coan, 161 N.H. at l l (emphasis added).

The State fails to appreciate that Coan has no application here because this Court has already

granted leave to amend, inviting the Plaintiffs to assert new causes of action for which the State

has no sovereign immunity. As discussed, this Court, after outlining categories of potentially

viable claims (such as constitutional claims or an RSA 171-A:13 claim, for example), granted

"leave to amend the[] complaint to correct the deficiencies outlined above." Order at 4. In short,

Coan has no application to this case because Coan addressed a distinct situation where leave to

amend had been denied by the trial court and not, as here, rg anted by the trial court.

18. As a practical matter; the new causes of action rest on the very same set of facts

alleged in the original complaint, hinge on the same issue of statutory interpretation deferred by

this Court, and, as discussed below, are ripe for judgment as a matter of law. It also bears noting

that the oniv relief sought in Counts II, III and IV is declaratory judgment concerning the

deferred statutory interpretation issues.

19. Even assuming arguendo that the State correctly interprets the scope of leave to

amend granted by this Court, "exceeding the scope of a court's leave to amend is not necessarily

sufficient grounds for striking a pleading or portions thereof." Brown v. Deputy No. 1, 2014 WL

3519095, *7 (S.D. Cal. 2014). While new claims may be stricken if "wholly specious" or

unfairly prejudicial in some way, see id., the State does not argue either (or any) recognized

grounds to reject the amended complaint. See Sapiro v. Encompass Ins., 221 F.R.D. 513, 518

(N.D. Cal. 2004) ("Nothing in the record suggests that plaintiffs are litigating in bad faith or that

acceptance of plaintiffs' amended complaint will spur ̀ undue delay. "'). To the contrary, the new

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causes of action present viable causes of action and do not unfairly prejudice the State in any

way.

20. Finally, it bears emphasizing a point of New Hampshire practice lost on the State:

procedure should not overtake substance, and should not frustrate judicial economy. See Karch

v. BayBank FSB, 147 N.H. 525, 528 (2002) ("We believe, however, as did the trial court, that

reaching the merits of the second writ best promotes judicial economy and resolves the issues

before us without elevating procedure over substance.").

21. For all these reasons, the Court should deny the State's motion to strike Counts II;

III and IV of the amended complaint.l

IV. The Plaintiffs have stated viable claims in Counts II, III and IV, there are nodisputes of material fact, and the Plaintiffs are entitled to summary judgment onCounts I, II, III and IV.

22. With respect to the substance of the new counts, the State contests these new

counts, not by disputing any material fact, but by arguing various legal grounds. As discussed

below, the State's legal arguments fail and the Court should grant summary judgment to the

Plaintiffs on Counts I, II, III and IV.

A. Count I: Declaratory Judgment

23. For the reasons set forth in the Plaintiffs' motion for summary judgment and

supporting memorandum of law filed on or about December 6, 2013, as well as the Plaintiffs'

combined reply memorandum filed on or about February 14, 2014, each of which are

incorporated herein by reference, the Plaintiffs renew their request for summary judgment on the

1 Ironically, it is the State who has exceeded the instructions contemplated in this Court's May 22"d Order by filing the motion to strike claimswhich this Court has already granted leave to assert by way of an amended complaint. What is more, the State, under the guise of a motionto strike, now seeks to dispute the propriety of granting leave to amend—an argument the State should have presented in a reconsiderationmotion ten days of this Court's May 22"" summary judgment Order, rather than months later after reviewing the (non-immune) causes ofaction the Plaintiffs have now asserted.

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discussed, has no sovereign immunity with respect to Count I (or any of the Plaintiffs' other

Counts).

B. Count II: Violation of Part I, Article 37 of the State Constitution

24. In Count II, the Plaintiffs have asserted a constitutional separation of powers

claim as follows: "By interpreting SB 147, Chapter 125, Laws of 2011, (RSA 126-A:5, XIX) to

allow DHHS and its Commissioner to plan for and attempt to force long-term care services and

supports for the developmentally disabled and acquired brain disorder populations into any

Medicaid managed care program, contrary to the plain language of the statute and its legislative

history, DHHS and its Commissioner have unlawfully exceeded any authority delegated by the

legislature to the Defendants to implement that statute." First Amended Complaint ¶ 58.

25. In Paragraph 60 of the amended complaint, the Plaintiffs allege "DHHS and its

Commissioner have violated Part I, Article 37 of the State Constitution by usurping the power of

the legislature by their improper and illegal interpretation of RSA 126-A:5, XIX."

26. The State offers no substantive dispute concerning Count II, except to argue that

"Plaintiffs' claim involves DHHS's execution of a law, not the making of any law." State's

Mem. of Law at 7 (emphasis in original). The State, however, constructs its argument on a false

dichotomy. The State incorrectly asserts that an administrative agency can only violate the

separation of powers provision (Part I, Article 37) by promulgating administrative rules in

contravention of a statute.

27. The separation of powers directive "is violated by an improper imposition upon

one branch of constitutional duties belonging to another, or, an encroachment by one branch

upon a constitutional function of another branch of government." In re Petition of Judicial

Conduct Committee, 151 N.H. 123, 125 (2004) (quotations omitted); N.H. CONST. pt. I, art. 37.

28. The New Hampshire Supreme Court has recognized two forms of constitutional

challenges to administrative action pursuant to Part I, Article 37: (1) a "challenge to the

constitutionality of the enabling statute as an impermissible delegation of legislative authority,"

Petition of Strandell, 132 N.H..110, 118 (1989), which the Plaintiffs have not asserted; and (2) a

claim that an agency "acted beyond its authority" thereby usurping legislative power, Strandell,

132 N.H. at 118, the very claim which the Plaintiffs assert in Count II.

29. . In the context of Part I, Article 37, the New Hampshire Supreme Court has made

plain that administrative agencies "[do] not possess the power to contravene a statute." Appeal

of State Employees' Assn of New Hampshire, 156 N.H. 507, 510 (2007); DeVere v. State, 149

N.H. 674, 677 (2003) ("it is well established that administrative officials do not possess the

power to contravene a statute" (brackets omitted)). To implement the separation of powers

constitutional principle, it is "the responsibility of this court to insure that another will is not

substituted for that of the legislature when, out of necessity, it delegates certain limited powers."

Kimball v. New Hampshire Bd. of Accountancy, 118 N.H. 567, 569 (1978).

30. The New Hampshire Supreme Court has never confined the constraint on

administrative power by Part I, Article 37 to administrative rulemaking, as the State contends.

Nor does the State explain why, in its view, only rulemaking would come within the limits of

Part I, Article 37. Administrative agencies of course have various methods of administering and

interpreting a statute, ranging from a formal administrative rule, a policy statement (or informal

statutory interpretations), or case-by-case interpretation of a statute in the context of

adjudication.

31. Under the State's view, administrative agencies have boundless authority to

interpret (and misinterpret) a statute so long as they do so through non-rulemaking means. Of

course, that result is absurd. Running directly contrary to the State's argument, the New

Hampshire Supreme Court has said that "[a]n agency .may not add to, change, or modify the

statute by regulation or through case-by-case adjudication." Appeal of the Local Government

Center, Inc., _ N.H. , 85 A.3d 388, 403 (2014) (emphasis added). The New Hampshire

Supreme Court has also applied the separation of powers constraint on administrative power to

non-rulemaking actions by an agency. See Appeal of Somersworth School Dzst., 142 N.H. 837,

840 (1998) (analyzing propriety of PELRB certification of bargaining unit). By logical

extension, these cases illustrate that whatever means an agency chooses to interpret a statutory

delegation of power, the agency may not contravene a statute (i.e., usurp legislative authority)

without violating the separation of powers doctrine.2

32. For the reasons set forth in the Plaintiffs' prior summary judgment pleadings,

DHHS has violated Part I, Article 37 by misinterpreting SB 147, Chapter 125, Laws of 2011,

(RSA 126-A:5, XIX) to allow DHHS and its Commissioner to plan for and attempt to force long-

term care services and supports for the developmentally disabled and acquired brain disorder

populations into any Medicaid managed care program, contrary to the plain language of the

statute and its legislative history, meaning DHHS and its Commissioner have unlawfully usurped

legislative authority. The Court should therefore grant the Plaintiffs summary judgment on

Count II.

2 Even assuming arguendo that the State is correct and only administrative rulemaking falls within the constraints of Part I, Article 37,DHHS's actions in effect amount to a de facto administrative rule. A "rule" is statutorily defined as "each regulation, standard, ... or otherstatement of general applicability adopted by an agency to ....implement, interpret, or make specific a statute enforced or administered bysuch agency or ...prescribe or interpret an agency policy, procedure or practice binding on persons outside the agency." RSA 541-A:1,XV. General statements of policy, such as DHHS's determination that it has authority to force long-term care services and supports for thedevelopmentally disabled and acquired brain disorder populations into any Medicaid managed care program, amounts to a de facto rule.See Petition of Pelletier, 125 N.H. 565, 571 (1984) (concluding that policy statement included within agency bulletin concerningintermediate care facility eligibility criteria constituted administrative rule); Nevins v. New Hampshire Dept. of Resources and EconomicDevelopment, 147 N.H. 484, 489 (2002) (discussing de facto administrative rules); cf. Bel Air Associates v. New Hampshire Dept. of Healthand Human Services, 154 N.H. 228, 233 (2006) ("Where an agency's efforts effect substantive changes binding on persons outside the.agency, the agency's policy constitutes a ̀rule' that must be promulgated pursuant to the APA."). Thus, the State cannot avoid thePlaintiffs' Part I, Article 37 claim by arguing that the separation of powers doctrine is limited to rulemaking because the conductcomplained of in this case constitutes de facto rulemaking.

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C. Count III: Breach of Contract

33. In Count III of the amended complaint, the Plaintiffs allege that the Area Agency

plaintiffs are all qualified Medicaid providers who have entered into Medicaid Provider

Agreements with the State. First Amended Complaint ¶ 63. The Plaintiffs further allege that the

State violated these contracts by illegally interpreting RSA 126-A:5, XIX to allow Medicaid

managed care for the optional long term care services and supports provided by the Area

Agencies pursuant to RSA Ch. 171-A. See id. ~(¶ 63, 64.

34. For its part, the State does not deny the existence and nature of these contracts and

indeed attaches a sample Medicaid provider agreement for Lakes Region Community Services

Council to the State's memorandum of law. See Bel Air Associates v. N.H. Dept. of Health and

Human Serv., 1S8 N.H. 104, 108 (2008) (holding that Medicaid provider agreements are

contracts). The State argues only that DHHS has not breached any terms of these contracts.

35. The State fails to acknowledge that Judge McNamara has found (and DHHS is

collaterally estopped from denying) that the Medicaid provider agreements include as an implied

term that bath parties will act in compliance with all governing law, which enters into and forms

a term within the contract. See Bel-Air v. DHHS, Docket No. 217-2006-CV-00515, at 9-10 (May

10, 2011), a copy of which is attached as Exhibit 1.3

36. Accordingly, compliance with RSA 126-A:5, XIX is included within the implied

contractual term requiring DHHS to comply with applicable law. To the extent DHHS has failed

3 See also Richard A. Lord, Williston on Contracts, § 30:19 (4th ed. 2004) ("Except where a contrary intention is evident, the parties to acontract including the Government, in a contract between the Government and a private party—are presumed or deemed to havecontracted with reference to existing principles of law.... Under this presumption of incorporation, valid applicable laws existing at thetime of the making of a contract enter into and form a part of the contract as fully as if expressly incorporated in the contract.") (footnotesomitted)); N. Kniffin, 5 Corbin on Contracts § 24.26 (rev. ed. 1998); Tuttle v. New Hampshire Medical Malpractice Joint UnderwritingAssn, 159 N.H. 627, 637 (2010); Norfolk & W.R. Co. v. Am. Train Dispatchers' Assn, 499 U.S. 117, 130 (1991.) (quoting Farmers andMerchs. Bank of Monroe v. Fed. Reserve Bank oy'Richmond, 262 U.S. 649,.660 (1923)); Resolution Trust Corp. v. Diamond, 45 Fad 665,673 (2d Cir. 1995); Conille v. Secretary of Housing and Urban Development, 840 F.2d 105 (1st Cir. 1988); Selcke v. New England Ins. Co.,995 F.2d 688, 689 (7th Cir. 1993); Merrill Tenant Council v. U.S. Dep'~ of Housing &Urban Dev., 638 F.2d 1086, 1089-90 (7th Cir. 1981).

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to (or has manifested its intention to fail too) comply with RSA 126-A:5, XIX, as outlined more

fully in the Plaintiffs' summary judgment pleadings, that violation of the statute constitutes a

contemporaneous violation of the Medicaid provider agreements, for which the Area Agency

Plaintiffs are entitled to relief in the form of a declaratory judgment.

D. Count IV: Violation of 29 U.S.C. § 794 and RSA chapter 171-A.

37. In Count IV, the Plaintiffs have alleged two varieties of statutory claims. One

stems from the Plaintiffs' federal rights, as guaranteed by the Rehabilitation Act (29 U.S.C. §

794), and the other claim asserts violation of the Plaintiffs' rights pursuant to RSA chapter 171-

A. Both claims grow from the fact that DHHS is interpreting the Medicaid Managed Care

Statute (RSA 126-A:5, XIX) illegally and in such a way as to strip the Area Agencies of their

duties and rights under federal law and state law.

38. In Garrity v. Gallen, 522 F. Supp. 171 (D.N.H. 1981), the. United States District

Court for the District of New Hampshire explained the legislative origins and purpose of RSA

chapter 171-A. In Garrity, a group of New Hampshire parents filed a class action lawsuit

regarding poor conditions at the Laconia State School which, at that time, was the "only

institution of the State of New Hampshire for the provision of services" to persons with mental

disabilities. Garrity, 522 F. Supp. at 175.

39. Prior to Garrity, several federal and state statutes had been enacted which would

later form the basis for the relief requested (and awarded) in Garrity. In 1973, the federal

government enacted the Rehabilitation Act, which in general terms extended services and

4 The State, in passing, challenges the sufficiency of the Plaintiffs' contract claims given the prospective nature of the relief sought.. TheState has crafted an argument which ignores that "[t]he declaratory judgment act] is designed to prevent not only threatened wrongs, butalso uncertainty and misunderstandings in the assertion of rights. As a consequence, declazatory relief maybe sought prior to an actualinvasion of rights." Lorenz, 152 N.H. at 637 (quotations omitted). In the specific context of declaratory judgments concerning prospectiveviolation of contractual rights, the New Hampshire Supreme Court has again emphasized that "by its very nature, a declaratory judgmentaction can be brought before an actual invasion of rights has occurred and is intended to permit a determination of a controversy beforeobligations are repudiated and rights invaded." Binda v. Royallns. Co., 144 N.H. 613, 617 (2000) (quotation and brackets omitted).

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protections to those with extreme disabilities. In 1975, the federal government enacted the

Education for All Handicapped Children Act ("EHCA") requiring equal access to education.

Also in 1975, New Hampshire enacted RSA chapter 171-A, the stated purpose of which was

(and is) to "establish, maintain, implement and coordinate a comprehensive service delivery

system for developmentally disabled persons." RSA 171-A:1.

40. Since its inception, RSA chapter 171-A "contemplates the development of "area

_ .agencies" for various geographic areas designated by the Director, to be staffed by `area

boards'." Garrity, 522 F. Supp. at 228. For every client in the service delivery system, N.H.

RSA 171-A:12 mandates" an individualized service plan, now called an "individual service

agreement." Garrity, 522 F. Supp. at 229; RSA 171-A:12.

41. RSA chapter 171-A specifically guarantees the rights of the recipients of services:

Every developmentally disabled client has a right to adequate and humanehabilitation and treatment including such psychological, medical, vocational,social, educational or rehabilitative services as his condition requires to bringabout an improvement in condition within the limits of modern knowledge.

RSA 171-A:13.

42. As mentioned, to facilitate the service delivery system, RSA chapter 171-A

created the area agency system. "`Area agency' means an entity established as a nonprofit

corporation in the state of New Hampshire which is established by rules adopted by the

commissioner to provide services to developmentally disabled persons in the area." RSA 171-

A:2, I-b. The Area Agency "shall be responsible for administering area-wide programs and

services for developmentally disabled persons. Each area agency so designated shall be the

primary recipient of funds that may be dispensed by the commissioner for use in establishing,

operating or administering such programs and services. The programs and services for which an

area agency is responsible include, but are not limited to, diagnosis and evaluation, service

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coordination, community living arrangements, employment and day services, and programs

designed to enhance personal and social competence." RSA 171-A:18, I.

43. In the course of its analysis finding various violations of federal rights, the

Garrity Court in no uncertain terms held:

N.H. RSA 171-A represents an unfulfilled promise to developmentally disabledindividuals of the state. The statute speaks in terms of specific rights, obligations,and guarantees, and ...the rights and obligations created by N.H. RSA 171-A arenot triggered by or conditioned upon the receipt of federal funds. Yet, as thefollowing discussion will reveal, the State of New Hampshire has failed to meetmany of its obligations under N.H. RSA 171-A, and plaintiffs have been deniedtheir rights under same.

Garrity, 522 F. Supp. at 233.

44. The Court went on to observe that, among other statutory violations, and despite

the enactment of RSA chapter 171-A in 1975; "at the time of trial in this lawsuit not a single

`fixed point of referral' nor ̀area agency' had been established." Id.

45. The Garrity Court summarized the need for judicial relief as follows:

In sum, although we recognize that organization of state government ispeculiarly entrusted to state officials and that principles of federalism militateagainst interference with same, this Court also recognizes its responsibility toorder whatever equitable relief is necessary to protect the federal statutory rightsof this politically powerless group. Accordingly, because we have determined thatmany of the problems and deprivations encountered by developmentally disabledchildren in New Hampshire are rooted in the lack of accountability by any singlestate agency for same, we will hereinafter order defendants to revise theirplacement procedures to make them conform to the procedural protectionsafforded by the EHCA. In short, under RSA 171-A, the detailed relief to becontained in our subsequent Orders will include development and maintenance ofa proper state-wide service delivery system; revision of placement procedures fordevelopmentally impaired individuals; compliance with the statutoryrequirements for ~~area agencies" and "area boards", N.H. RSA 171-A:2 I(a)-(c) (Supp.l979); N.H. RSA 171-A:6 (Supp.1979); comprehensive screeningevaluations; proper guardians; individual service plans; periodic reviewscontemplated by RSA 171-A:11; the proper notices to clients, relatives, andguardians required by RSA 171-A:8; and detailed instructions as to housing,privacy, noise levels, equipment, evaluation for education and training,recreational programs, diets, medical care, administration of medication, the use

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of physical restraints, and written policies relative to mistreatment, neglect, orabuse of residents.

Id. at 236 (footnote omitted) (emphasis added).

46. As the foregoing makes plain, the role of area agencies, contemplated by the text

of RSA chapter 171-A, is a necessary component of New Hampshire's statewide service delivery

system for delivering services guaranteed by the Rehabilitation Act and RSA chapter 171-A.

47. It bears repeating that, as set forth in the Plaintiffs' summary judgment pleadings,

the Medicaid long term care services that Area Agencies -- the organizational Plaintiffs in this

declaratory judgment action —are obligated to provide to their clients by RSA chapter 171-A

include:

• Residential and Day Services provided in client's home - He-M 521:03;

• Day Services — He-M 517.050• Employment Services — He-M 517:05(g);

• Community Support Services — He-M 517:05(k);

• Participant Directed and Managed Services — He-M 517:05(n);

• Service Coordination - He-M 517:05(d); and

• Respite Care Services — He-M 517:05(h).

See RSA 171-A:18; N.H. Code of Admin. Rules, He-M 517.05 and He-M 521.03

48. Many of these services do not involve the provision of direct care, let alone

medical care. For example, Employment Services and Day Services include helping clients

obtain employment, learning to grocery shop, and cook, and how to manage money. These are

areas the MCOs have no experience with, no capability to manage, and no authority to manage.

That lack of authority underscores the necessary ongoing viability of the area agencies, and the

violations of RSA chapter 171-A and the federal Rehabilitation Act the defendants are (or intend

to) commit by eliminating the area agencies, as the State has repeatedly asserted in its

"prospective implied repeal" arguments in its summary judgment pleadings. The State asserts

that under its interpretation of the New Hampshire Medicaid Managed Care statute, the area

'.~.

agencies will be forced out of business when Step 2 for long term care services and supports is

implemented by DHHS. Such a result is directly contrary to the State's obligations under RSA

chapter 171-A and the Garrzty decisions and should not be countenanced by this Court.

49. Finally, it bears. emphasizing again that the only form. of relief the Plaintiffs seek

by raising the Rehabilitation Act and RSA chapter 171-A in Count IV is a declaratory judgment

concerning the interpretation of RSA 126-A:5, XIX. Specifically, in Count IV (as with the other

counts) the Plaintiffs only seek a declaration that RSA 126-A:5, XIX does not allow DHHS to

plan for or attempt to force long-term care services for the developmentally disabled and

acquired brain disorder population into any Medicaid managed caxe program.

Court:

WHEREFORE, for the reasons stated above, the plaintiffs respectfully request that this

A) Grant summaxy judgment to the Plaintiffs on all counts;

B) Deny the State's Motion to Strike Counts II, III, and IV of Plaintiffs' Amended

Complaint, or in the Alternative, to Dismiss Those Counts for Failure to State a

Claim; and

C) Grant such other relief as the Court deems just, equitable and proper.

-17-

Date: August 6, 2014

Respectfully submitted,

ALL PLAINTIFFS

By their attorneys,

DEViNE, MILLIMET &BRANCH, P.A.

By:Thomas- Quarles, Jr., Esq.,NH Bar No. 2077Joshua M. Wyatt, Esq.,NH Bar No. 18603111 Amherst StreetManchester, NH 03101Telephone: (603) 695-8641Facsimile: (603) 666-4288

and

JOHN D. MACINTOSH, P.C.

Date: August 6, 2014 By:John D. Macintosh, Esq.NH Bar No. 157724 Montgomery StreetConcord, NH 03301Telephone: (603) 225-1188Facsimile: (603) 224-3055

CERTIFICATE OF SERVICE

I certify that a copy of the foregoing Plaintiffs' Supplemental Memorandum of Law inSupport of Motion for Summary Judgment, Motion for Summary Judgment on all Counts, andObjection to State's Motion to Strike Counts II, III and IV of Plaintiffs' Amended Complaint, orin the Alternative, to Dismiss Those Counts for Failure to State a Claim was sent this 6th day ofAugust, 2014, by first-class mail, postage prepaid to: Laura Lombardi, Esquire, New HampshireAttorney General's Office, 33 Capitol Street, Concord, New Hamper 033 ~ ~

.i:\W DOX\DOGS\CLIENTS\023625\098397\M2680001. DOCX

Thomas Quarles, Jr., Esq. /

-~g-

THE STATE OF NEW HAMPSHMREJUDICIAL BRANCH

Merrimack Superior Court163 North Main St./PO Box 2880Concord NH 03302-2880

NOTICE OF DECISION

Thomas Quarles, ESQDevine Millimet & Branch.PAPO Box 779Manchester NH 03105

Telephone: (603) 225-5501Tl'Y/TDD Relay: (800) 735-2964

http://wuvw.courfs.state.nh.us

Case Name: Be( Air Associates v. State of NH, Dept. of Health Human SerCase Number: 217-2006-CV-00515

Enclosed please find a copy of fihe court's order of May 10, 2011 relative to:

ORDER

May 10, 2011 William S. McGrawClerk of Court

(489)

C: Laura E.B. Lombardi, ESQ; Anne M. Edwards, ESQ; Rebecca L. Woodard, ESQ

RECEIVED MAY 111011NHJB-2503-5(02/24/2009)

MERRIlVlACK, ~~ SUi'ERIUR COURT

Bel Air Associates

v.~

~fiate of New Hampsl3ire DepartmEnt of I3ealth &Human ~+ervices

NO. 2x~-2oo6-CV-~~i5

QR~3.~R

The PlaintifF, Bel Aiar Associates (`Bel A.ir"), seeks damages against the Defendant,

State' of New I~atnpshire Department o~ Health and Human Services ("DHHS"J, for

breach of contract. For the reasons stated in this Final Order, the Court finds in favor of

Bel .Air. Because the parties have~not articulafied a posifiion with respect to damages en-

tirelyconsistent with the Court's Order, the parties will be p~rmitt~d to file a ~=page

.memorandum to supplement their damages analysis to conform to the rationale of this

Order, without waiving their position on damages as expressed at trial.

I

This case hay a lengthy procedural history. The Flain~iff is a New F~iampshire

partner~liip that operates astate-li+~ensed nursing home in Goffstown. The Plaintiff

provides sexvic~s paid for by Medicaid and administered by DHHS. The Medicaid pro-

gram, which provides joint fEderal and sfiate funding of me~icai care for individuals who

cannot afford to pad fiheir own medical costs, began in 1865 with the enactriient of Title

XIX of the Social Security Act. ee P~tbli~ Lava No. 8g-g~ § i21-A, ~g Statutes 343

C~R65)~ 4~ CFR 430.0 (2005). S~afies are not required fio part cipafie in Medicaid but ail .

.2_

of them do; the program is a cooperative ane. The federal government pays between

50%and 83% of the cost the State incurs for patient care, and in return the State pays its

portion of the casts and complies with certain statutory requirements for making eligi-

biTity determinations, collecting and maintaining information, and administering the

program. Arkansas Dent of Health.and Human Services v. Al~lborn, X47 U.S. 268, 2~5

(2006). In order to participafie in Medicaid, states must submit and receive approval for

their state plans for medical assistance. 42 U.Q.C. §x.396 (2000). The program is ad-

ministered on the federal level by the Centers for Medicare and Medicaid services

("CMS"). CMS is in charge of~approving the stake plan.

In New Hampshire, DHHS establishes rates of reimbursement for service provid-

ers to Medicaid eligible persons. Reimbursement is ba.~ed upon certain allowable costs,

including capital costs..This litigation Ynvolves two techniques that DHHS began using

in 2oox in order to reduce reimbursement to nursing homes. First, DHHS changed its

rate-setting m~thodalogy to impose a cap on all capital cosfi ("Cost Cap") recovezy at the

$gam percentile of all nursing homes' allowable cost expense. Bel-Air Associates v. Dept

Qf Health and Human Services, ~~~. N.H. 22$, 230 (2006) ("Bel .Air I").1 Second, DHHB

created what it calls the "budgefi neutrality factor" ("BNF"), which is an across the board

'rate reduction DHI~S applies after it determines the individual rafie it should pay to

nursing homes for l~iedicaid reimbursement for the prospective six-monfih rate period.

,I,.,~~, at 23i.

In the mid-x99o's, the State ordered the Plaintiff~to close one of its two buildings.

x The present case has been to the New Hampshire Supreme.Court on two separafie occasions: once in

2006 (APA determination) and once in aoo8 (contract detaimination). For ease, this Court will refer to

the former as li i ~ and the latter as $el Aires.

-3-

In order to. replace the lost capacity due to this closure, the Petitioner sought and re-

ceivedapproval from the State for construction of an addition. Id. at 22g. DH~iS en-

aeted its Copt Cap, which the Plaintiff contends cost it roughly $~g,000. Tke Plaintiff

filed suit in December aoo3 challenging both provisions on the grounds that they were

sever properly adoptEd under the Administrative Procedure Act ("APA"), RSA 54~~A.

The trial court granted DHHS's motion to dismiss on the grounds that the Cost Cap and

BNF were not "rules" under the AFA. The trial court also denied the Plaintiffs request

to amend its complaint. The Plaintiff appealed.

On appeal, the New Hampshire Supreme Court held that both the Cost Cap and

BNF are "rubs" within the meaning of F.SA 54i-A:i, XV. Bel Air A.s~ociate~, z54 N.H. at

~3~. Tn Bel Air I, the Court noted that RSA ~.~i-E, which deals speci~fieally with nursing

'facilities, provides, "the department shall pursue as expediti~ausly as passible develop-

ment and ir~a.plementation of a reimbursement system for nursing facility services based

primarily on the acuity level o~ patients consisfient with state and federal law and all ap- ~.

propriat~ notice requirements." Id. at 233 citin RSA 15x-E: 6, I). The Court went on

to find that the rubs had not been adopted iri accordance with the APA and were; there-

fare, illegal. d at 2~5. As a resulfi, fih~ rules were not valid or ~f'fective against the

Plaintiff. See RSA 54x-A:22; fee also, Bel A;ir Associates, X54 N.H. at 235'• ~~

"In 2006, relying upon RSA 4gr:8 (1gg~), [the Plaintiff] brought a claim for

breach of contract against DHHS based upon the provisions of the ~gg2 provider agree-

went [("1gg2 agreement")]." Bel Air Associates v. N.H. Dept of Health and Human Ser=

vices, lg8 N.H. io4, io6 (2008) ("B~1 . it II"}, The Plaintiff alleged That DHHS breached

the x.992 agreement in two ways: (i) that DHHS breached fihe implied provisions that

the contract be performed in accordance with all state and federal laws; and (2) that

DHHS breached the implied covenants of good Faith and fair dealing. DHHS moved for

summary judgment on the grounds that the provider agreement was not a contract. The

trial court granted DHH~'s motion; holding tl2at "the 1992 [] a~r~ement could. not pro=

vide the basis for a breach of contracfi claim because it neither contained any substantive

reimburs~m~nt provision, nor placed any reciprocal obligation on DTiHS to perform."

Id. at io.~. 0n appeal, the' Nevv Hampshire Supr~m~ Court held that the X992 agreement

entered into b`y B~1 Air with the Mate is a contract. Id. at X08. Citing. several cases for

supporfi, the Court provided,

We hold ghat it is reaso~alily clear that pursuanfi to the i~}2 provideragr~einent, [the Plainfii~ an+d DI i~~ agr~ecl that [the P~ain~i~f~J would proyvide nursing hone services to 1~tEdicaid-eligible iridivicluals~ in exchange,far r~imburs~ment by I?HH~ as required by the provisions of 'T'itle XIX offihe Sooial ~~curity .l~ct, spe~~ically i~acorporat~d by ref~renc~ i~ theagre~rri~nt.

Id. The Court reversed and remanded tkie case for further proceedings. Id. at 14~. With

the procedural posture establisl~~d the Court proceeds v~itl~ the wets relevant do the pre-

gent case:

In ~g8~ and 19g~, The Plaintiff enterEd into Medicaid provider agreemEnt~ with

DHHS. Tie ~99~ agr~emerif is currently in fo~ee and has been inciefi~i~ely extended. Of

cri~trcal imporCanee; either parfiy may terminate the igg2 agreement on 3o days' notice.

In tool, DH~iS instituted tl~e Cost Cap; which upped capital cost r.~coveries at

the 8~~th percentile of allowable capital cost expenses of all participating nursing home

in the aggregate. Bel Air Associates, ~.~4 N.H. at z3o. When D~HH~ changed its rate-

setting methodology to impose the Cost Cap, it did so only b~ amencling. attachment

-5-

4.igD of the state plan. In other words, the Cost Cap was not the result of state or ad-

ministrative rule; it only existed iri fide state plan. CMS approved the applicable state

plan amendment in Febzuary 2001 with no rrrnentian of the BNF.

In October 2001, DT~HS began reducing provider rats through the BNF. Id. at

23x. At the time, the BNF arnourit and methodology was not contained in any stafie rule

or statute. It was not until 2ooz, after the first BNF had applied, ghat CMS approved the

amendmenfi to 4.igD of the state plan retroactively effective to October i, zoox. The

~~en~ment sirn.ply added a new sentence to the new subsee~ion vvhicli addresses n,urs=

ing home facility rate "rebasing." T ie sentence read, "The resulting rake will be subject

to budget neutrality.'.' Qn March 3x, 200 , DHHS sought another plan amendment add-

ing a seritEnce to the per diem rate calculation section of fihe state plan stating, "Thee

rates m~~ be subject to a budget neutrality provision." By lEtter dated June 12, 2oog,

CMS requested clarification. S~~cifically, CiVIS pointed out, "This application of an uri-

defined adjustment has the effect of rendering the entire rate setting procedure non

cbxnprehen~ve as there is no way to determine based• on the plain language what the ao-

tual rate will be." Nonetheless, CMS eventually approved the ameri~iment in Februazy

2004, retroaetive to February 2003. Thereafter, DI=T~HS applied a BNF o~ 6.39% in Feb-

ruaity 2o.og, iq..6~% in August X003, ~g.26% in February 200 .,. ~.q..84~ in August 2004,

~4.4~ ~n February 2no5, x.4.33% in August 2 05, and i~.7% in February 2006. In Au-

gust 2006, the BNF increased to 21.85%.

The system required DHHS to engage in prospective rate setting and to predict

future utilisation of the Medicaid system. DHI-iS's predictions were traditiona~l~ can- ~`

servafiive because by statufie the Commissioner of the D~epark~~nt is per~onal~y liable for

-6-

any excess. Comparg RSA 9:x9, with RSA g:2o.

Following the Bel .A.ir I decision, DHHS adopted the rate setting methodology for

fihe acuity based rates as an "emergency rule," effective December 1, 2006, pursuant to

RSA 54i-A: x8. DHHS also began the formal process to adapt the rule as a permanent

rule under the APA. The initial version of the permanenfi rule did not expressly define

the BNF, and as a result, the Joint Legislative Committee nn Administrative Rules

("JLCAR") entered a preliminary abjection based on the failure to specify the calculation

used in fihe application of the budget neutrality provision. In response, DHHS added a

definition for the BNF. ~ Def.'s Ex. 2; ~ l~s Pl.'s Ex. 18, Permanent Rule He-E

8o6.3i (p). However, a bill defining the BNF was pending in the legislature at the same

time, and JLC.A.R members felt it best to, leave the matter to the legislature: As a resulfi,

JLCAR enured a final objection in order to stay out of the policy decision of defining the

BNF, while at the same time allowing DHHS to adopt the rule. At trial, the Plaintiff did

not dispute that the BNF is a reasonable way to ensure that Medicaid payments can be

made properly.

Aside from the Cost Cap and BNF, much of the testimony at trial involved the is-

sue of "lapsing funds." Reimbursement rates are calculated prospectively every six

months. Preliminary rates for each nursing facility are provided to all individual nurs-

ing faciliries at last 3o days prior to implementation. As a result, a surplus often re-

mains in the nursing facility account at the end of the fiscal~year because it is impossible

to predict precisely what the future utilization will be. The Plaintiff alleges that the for-

mer DHHS Commissioner, John Stephen; intentionally overestimated the amount of

funds which would be necessary to pay., increased the BNF, and then allowed the eJccess

funds to "apse" into the general fund. DHHS's Exhibifi F shows the amount of the nurs-

inghome appropriation that lapsed to the general fund each fiscal year.

In 2007, the legislafiure attempted to address the issue of lapsed fiinds when it

considered HB ~z~, which provided that fiscal year 2007 funds appropriated for nursing

facilities reimbursements would be non-lapsing and paid to nursing homes. DHH~ op-

posedthe bill due to concern ghat fihe state plan amendment could cause CMS to r~con-

cider the viability of the Medicaid Quality Incentive Program ("MQIP"). The legislature

enacted HB ~2i as law in 200 .

Shortly after the law was passed, CMS required DHHS to amend the state plan in

order to make fihe supplemental paymenfis required by the new law. Although D~IHS~

had made a similar supplemental paym+~nt in 200 prior to receiving formal CI~IS ap-

proval of the-state plan amendment, DH.HS claims that the "environment was diffe ̀rent"

in ~oo~. It argues That in 2002 CMS had rotifiinely approved state plan amendments

and DHHS had no reason to believe the 2002 plan amendment would not be approved.

In two contracts by 200 CMS was scrtifinizing am~ndment~ significantly more closely

than it'had done previously.

Three days before DHHS received approval o~the state plan amendment,2 tie

Governor eliminated the expenditure class by executive arde~ 2008: 0, pursuant fio RSA

9:16-b. The New Hampshire Supreme Court upheld the Governor's decision against a

challenge alleging That hip action violated the separation of powers provision of the New

2 The issue of when DHH~ received notice of CMS approval was hofily contested afi trial. A DHHS docu-merit, which logs fer~eral mail, indicates that DHHS received CMS's appxoval.o~ Nov. i4, 2008. T~owever,the uncontradicted testimony at. t~ial~vas that the department did not have actual notice of the approvalbefore Nov. 24, 200.$; the date on a letter sent to DHHS. Based on this evidence the Court cannot find thatDHHS ~.ad actual notice prior to the date testified to.

Hampshire~Constitution in N.H. Health Care Assn v. Governor, ~~6i N.H. 378 (2ar1). In

fihat case, the plaintiffs argued that the Governor's refusal to pay money appropriated by

the legislature constituted a taking. However, the Court held fihat the plaintiffs' righfi to

fihe supplemental rates, to which laws 200 rz9:x and laws 2008 2gb:i8 referred, was

not "absolutely fixed and certain" and was not entitled to consfiitutional protection as a

vested property right. N.H. Health Care Assn, X61 N.H, at 39~. The Court also held thafi~

the plaintiffs had no property right in the lapsing funds. Seg id

III

As an initial mater, to the e~ctent that DHHS maintains it is shielded from liabilityt .

-by the doctrine of sovereign immunity, see DHHS's Post-Trial Mem. at 1~, the Court finds

its argument unpersuasive. "Sovereign immunity protects the State ifiself from suit in its

own courts without its consent...." Everitt v. Gen.,Elec. Co., r56 N.H. 2oa, tog (2007)

(quotation omittedj. Here, the State has allowed for sui~ks against it "founded upon any

express or implied contract with the State." RSA 49i:$. The Plaintiff asserts only claims

based upon its xyg2 agreement with DI~HS, which the Supreme court helel was a contract.

The court recognizes fihat under R.SA 54i-A;24, the APA provides relief only in the form of

a declaratory judgmerifi and nat money damages. However, the Plaintiff ~ damages claim

rests upon the thEory that compliance with the APA was an implied term of its contract, a

term which it alleges DHH~ breached. Damages flowing from such a breach would not

rest upon relief provided by the APA itself but rather from established principles of

contract law. As a result, the doctrine of sovereign immunity is inapplicable.

The Plaintiff cannot succeed an its claim that DHHS breached an implied-in-fact

contract. The Plaintiff alleges, "To the extent I~HHS's compliance with federal and state

Z~

lave in setting reimbursement rates is not expressly or implicitly contemplated in the 1992

provider agreement with [the Plaintiff], this nevertheless would be part of an implied-in-

fact agreement between [the Plaintiff] and DHHS." Pl.'s Trial Mem. at 6. However, "an

implied-in-fact contract, in the face of an express agreement governing the same subjecfi

matter, is legally untenable." Baer v. Chase, 392 F.3d bog, 6i6 (3d Cir. 2004). "In othex

v~ords; egress contract and implied-in-fact contract theories are mutually exclusive." ~ Iii.

at 6i7. Here, the l~Tew Hampshire Supreme Court has determined that the x.992

agreement is an express contract, which governs reimbursement by DHHS. fee Bel Air II,

1g8 N.H. at io8. Because the Plauintiffs implied-in-fact contract wot~l.d rest upon the very

same subject matter as the e~cpress contract--reimbursement—its implied-in-fact contract

theory i~ untenable. Therefore, the Flainfiif s relief must stem from either express ar

implied terms found within the 1992 agreement.

N

DHHS does not dispute tihat its contract contains an implied covenant of good faith

and fair deal zig, nor could it. SEe Olbres v..Harnn'ton Co-o,~. Bank, x.42 N.~. 227 233

(1997) ("Every contract imposes an obligation of good faith in its performance or~

enforcement."). Moreover, it does not appear that DHI~iS denies the Plaintiff s contention

fihafi the APA forms an implied term under the contract. ee Def.'s Past-Trial lVlem. at i5

citin Tutkle v N H Med Mal~rac~iee Joint Underwriting Assoc , i~g N.H. 6~~, 6q.4

(Zoso)). In fact, such resistance would appear futile. Seg Richard A: Lord, V1~illis~oriQ

Can~tracts, § 3q:a.9 (4th ed. 2004); sere also N. I~niffin, 5 Corbin on Contracts, § 24.26 (rev.

ed. i998); Wing v. Forest Lawn Cemefier~s'n, ioi P.Zd io9g,1io1(Cal. ig4o) (``[A]ll

applicable laws in existence ~vhen an agreement is made necessarily enter into it and form

-10-

part of it as fully as if fihey were e~aressly referred to and incorporated in its terms. ")

(quotation omi'tted). Because the parties generally agree thafi that the igg2 agreement

contained requirements of good faith and fair dealing, and requirements under the APA,

the only questions remaining are whether DH~IS breached.those implied ~~rms, and ifso,

what is the reme~.y.

The dispute between the parties spans several years. All the while, the sgg2

agreement has remained intact. As a result, although the Plaint~ff~iderifiifies a poinfi at

which DHH~ irii~ially breached the contract, it also poirit~ to reaso~~ why ~ub~equent

a~tians taken b~ DH~IS, with regard to the Cost Cap and BI~F, did. not cure the uutial

breach. 1'he Fl~in'tiff alleges that DHHa'~ fiat breach oocurr.~d when it initially created

and implemented the Cost Cap and BNF without complying with the rule-making

procedures of the APA. Ne~rt, the Plaintiff ailege~ that D.~THS°s ixrsplemeritafiion of the Cost

Gap and BNF as an "emergency rule" foliawing the Supreme Court's decision in Bel .Air I

did no~k curt the unlawful nature of the original breach. Finally, the Plaintiff alleges that

eweri after DHHS complied witih the requirements of the APA and promulgateel both the

Cost Cap end the BNF, the two provisions still remain illegal. Given the sequential flow of

tki~ Fla nfiiff's axgument, the Court frames its analysis in a similar fashion.

O~iigi~.al Im}~lementa~ion

The G+ourt fi~.ds that DHH~ breached fine 1992 agreement when it began

iz~~lementing the Copt Cap and BNB witlac►ut fallowing the pxoc~dures of the APA.

Pursuant to tYie 1992 provider a~reem~nt, the Plaintiff agreed to provide nursing home

services to Medicaid-eligilile individuals in exchange fc~r reimbursement by DHHS. She

Bel Air I, .x58 N.H. at ~0~8. Sp~ci~ically incorporated into the agreement way fife

requirement that DHHS abide by the provisions of Title XIX of the Social Security Act.

See id. However, DHHS's obligations were nat so limzted. As recognised above; in setting

its reimbursement rates, DHHS was required to abide by all laws applicable to the subject

matter of the contract. fee Tuttle, l5g N.H. at 644 (citing Wortli~~, Co. v. Kavanaugh, 2g~

U.S. 56, 60 (x935) Apr the proposition that "[fi]o know tl~e obligation of a contract we look

tq tk~e laws in force at its mal~ng.").

The obligation to abide by applicable law in~lud~d ~lae requirement that DHH~, as

an administrative agency,. abide by the .APA, RSA ~~r A. In Bel Air I, the Court

determined that "the capital cosfi. cap and the budget n~ufiralit~ factor are rules that. were

riot adopfiea. in accordance with the APA~" Bel ~iir I, x5~} N.H. at 235: It also determined

that both provisions "are therefore not valid or effective ag~in~fi the petitioner." Id. Given

the Court's ruling in l:Air I and the fact ghat the APA was an irnglie~ term in the xgg~

provider agr~emerit, DHHS's failure to abide by such requirements is a breach of the

provider agreement. Thy DHHS's failure to comply with fine APA had real. consequences

fio the Flainti~f. The agreemenfi between DHHS and the Plaintiff way terminable by either

with go days' notice. Without actual knowledge of the manner in which they would be

paid, The Plaintiff could not make an intelligent decision to continue with a aon~tract with

the State. And, wi~haut actual knowledge of recl.~ctions to be applied to ids expenses, the

Plaintiff oould well be misled about whether or not to proceed with the contract.

DHH~ maintains that "even tho~.gh the BNF and [Cost Cap] wire not valid ox

effective as administrative rules until they were properly promulgated ur~+der fihe APA,

p~yrnents to [the Plaintiff] during ~tliat per-iod of time nevertheless complied with the

Provider Agreement." Def 's Post-TriallViem. at ~.~. Specifically, DI iHS argues that

-1a-

because CMS approved the state plan amendments that implemented both the BNF and

Cost Cap, payments to the Plaintiff complied with the requirements under the agreement.

However, this argument rests upon the false premise that DHHS was only required.to

follow express terms within the agreemenfi. As the Supreme Court has recognized, and as

this Court lias already articulated above, the laws and regulations in place at the time the

contract was created form implied terms of the confiract, which are jusfi as binding as those

terms expressly stated. As a result, DHHS's argument fails.

Although the Court finds that DHI-~S breached the 1gg2 provider agxeement with

regard to the APA, it cannot find thafi DHHS breached the implied covenant of good faith

and fair dealing when ifi originally implemented the Cost Cap and BNF. Every New

Hampshire contract has an implied duty of good faith and fair dealing. Livingstone v.18

Mile Poinf Drive, 158 N.H. 6~.9, 624 (2oog); Restatement ~Secondl of Contracts, § zo5.

"Tn New Hampshire, there is nofi merely one rule of implied good faith duty, but a series of

doctrines, each of which serve different functions." Great L~.k~s .~irc~aft Co. v. Cit~f

~larer~o..n~,135 N.H. 2~0, 293 0992)• The various implied good. faith obligations fall into

three general categories: (x) contract formation; (2) termination of at will employment

agreements; and C3) limifiation of discretion in contractual performance. I_.~l. Here, the

Plaintiff argues that DHHS breached the third category. "While the third category is

comparatively narrow, its broader function is to prohibifi behavior inconsistent wifih the

parries' agreed-upon common purpose and justified expectations as well as with common

standards of decency, fairness[,] and reasonableness." Birch Broadcasting', Inc. v. Ca~tal

~roadcas~in~ Cori., Inc.,16i N.H.1g2, zg8 (2oio).

The Court cannot find that failing to promulgate rules under the APA constitutes a

_~3_

breach of the irr~p~ied duty of good faith and fair dealing. Although'suGl~ a failure amounfis

to a krreach of contract, it does not, without more, amount to a breach of the implied

covenant of good faith and fair dealing. ~e Livingston, x58 N.H. at 625 (party must

demonstrate subterfi~ge, evasion, ox some level of bad faith fio show a violation of the

implied duty of good fai~kh and fair dEaling); see also Harper v. Heal hsouree N.I°i., Inc.,

14o N.H. ~~o, ~~b (1996). Na evidence exists that DIMS adopted the Cast Cap or BNF

with any degree of bad faith, subtez f~.ige, ox evasion. As a result, the Plaintiff has failed. to

sustain its bur~.en of demonstrating that DHHS's initial pr~mulgatiori of the Cost Cap and

BNB' violated the implied duty of good faith and fair dealing.

Implementation. of the "Emergency Rules"

On DEcember 1, 2006, following the Supreme Court's decision in Bel .Air I, DHHS

adopted an "emergency rcile." The filing of ~an emergency rule is an exception to the

general rule-making requirerhents under the APA. S~ RSA 54i A:3. Are emergency rule

may be implemented "~i]f an agency finds that an imminenfi peril to the. public health or _ ._

safety rEquires" it. RSA ,~41 A:~$, I. When implementing such a mile, the agency must

state- in writing. its reasons for finding immin~xit .p.~~il to the public health or safety and

makE rEa.~onable e~f£az t~ to insure ~i~fi the emergency rifles are made known to person

who may be affected by them. RSA 541-A:18, I-II. The rule is not effective after i8o days

"from the date and dime of filing with the director of legislative services." RSA 54i-A:18,

II.

In attempting to comply with the requirements under the emergency rule-malting

pirocedure, DHH~ provided the following explanation, ̀

In an opinion - issued September a8;, 2006[,] in Bel Air Associates v. NevyF~iampshire De.~artrr~ent of Health and Human Services (Docket No. 200~-

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022), the New Hampshire Supreme Court held that the "capital cost cap"and "budget neutrality factor" that are contained in the~federally approvedState of New Hampshire Medicaid Flan Attachment 4.19D constitute "rules"pursuant to RSA 54Y-A: i, XV (Supp. 2000, and are therefore invalid orineffective~against the petitioner; Bel-Air. The "capital.cost cap" and "budgetneutrality factor" are significant components of the New ~-iampshireDepartment of Health and Human Services' ("Department") ratesettingformula used to establish reimbursement rates for eligible nursing facilitiessuch as Bel-Air.

The Department considers the provision of continued and uninterruptedcare . to the Mecliaaid eligible elderly and chronically ill adult population(["]recipients") that are in need of care a sigrnificant liealfih and safetymatter. In lig~it of the Court's opinion in the Be `'r <case, the Departmentfinds that an imminent peril to the public health or safety of the recipientscould be resented iri the absence of adoption of rules under RSA 54i-Abecause o~~e uncerkainty created by the Court's opinion with respecfi to theDeparkm~nt's ratesetting for eligible nursing facilities. The Deparhnenfi,therefore, has determined fihat filing the attached emergency rules pursuantto RSA 541-A:x8 (Supp. good) is necessary and appropriate to avoidunnecessary peril to the health and sa~et~ of the recipient.

Pl.'s Trial Mem. At x~.. DHHS also provided a summary of the ef#'ect if the rule were not

adopted: "If the rule were not adopted[,] the provision .of continued and uninfierrupted

care to theMedicaid eligible elderly and chronically ill adult populatian...that are in need

of care would create a significant health and safety matter." Thus, DHHS's justification fox

implementing the zvle rested on two interrelated premises: (1) that the Court's decision to

strike down two siginaficant components of DI-~HS's rate-sitting formula caused

uncertainty; and (2) that the uncei~fiainty could present. an immine~t~peril to the public

health ox safety of Medicaid recipients. The question becomes whether fihese.;reasons

support DHHS's implementation of an emergency rule.

The New Hampshire Supreme Court has not addressed the standard of reviewing

the validity of emergency rules under RSA 54.1 A: ~.8. However, "administrative procedure

acts in many states provide for the promulgation of emergency rules." 73 C.J.S. Public

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Adminis alive Law and Procedure § 20, (201.). Many of these states have a similar

requirement of imminent peril to public health, safety, and welfare. C,~ee, ~, Baer v.

Kla alz, T7i A.2d 603 (N.J. App. Div. 2001); see a sa, ~, Cre~se~v. Foster, 694 So.2d

xox6 (La. Ct. App. Est Gir. igg~). Alfihough the imminent peril determinations are given

deference, they are by na means unreviewable. See RSA 541 A:i8, IV; She also, e.g.,, Am.

Grain Prod. ~rocessin~ Inst. v. D~'t of Pub. Health, 46~ N.E.2d 455 ~M~S• X984)• I~

American Grain, the. Iy'las~achusetts ~u~reme Court provided, "The standard for deciding

whether an agency's finding of an emergency...was warranted is whether there was a

`substantial basis' for it." Inc .. Adtlitianally, "A requiremenfi fihat the agency provide a

statement of reasons for finding imminent peril to public health, safely, ar welfare

necessitating the adoption of an emergency rule demands more than a conclusory

statement, but caritempl~tes a descz~ption of facts and circu-mstances which justify the

conclusion thafi an imminent peril exists." 73 C.J.S. Public Administrative Lew and

Pro~e$u.~r § 20~ (2011).

With the foregoing sfiandard in mind, the Court finds that DHHS did not. az ticulate

a substantial basis for determining that imminent peril would eat to public safety or

health if the Cost Cap and BNF were not immediately implemented. At riwst, DHHa

provided that a danger to public safety and health "could b+e presented" if the rules were

not immediately adapted. This statement is a far cry from a determination of "imminent

peril." Moreover, a thorough reading of DHHS's stated reasons for adopting the

emergency rules supports the Plaintiff s argument fihat DHH~'s reasons were wholly

conclusory. DHHS merely parroted the. imminent peril standard without offering any._._

fac~iial evidence iri support.. If canclusaiy allegations were alI that was required, th+e time

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and rule-making provisions of RSA 54i A would be largely superfluous.

Finally, the mere fact that a Supreme Court decision crates a level of "uncertainty"

does not suffice to demonstrate imminent peril to the public hEalth and safety. Supreme

Court decisions that strike down rules or laws that Have been applied consistently over a

p~ria~d o~f tirne will necessarily cause some level of uncertainty. However, there is no sound

basa~ for concluding that the "emergency rule" m~chanis~i may be implEmented on each

such occasion.. Therefore, because the Court finds Yliat-fihe eme~ency rules were'not

priiperly implernertted in accardance wifih RfiA4r-A:18, their implemenfiation did not

cure DHHS's breach of the i~92 agreement.

However, once again, the Court cannot find that DHHS breached its duty of good_

faith and fair dealing in atte nr~pfiing to implement the emergency' rules. Although the

Court agrees ghat DH~iS's enactment of the emergency rules was unlawful and, therefore,

did not cure the breach of contract, trie~e is no evidence of subterfuge, evasion, malice, or

bad faith. ' W ~thoufi such evidence, DHHS clid not breach its duty of good faith and fair

dealing.

Promulgat~4n of Rules under ~,fiA 5q.1 A

At the same time that DH~-iS implemented the Cosh Cap and BNF as "emergency

rule," it also began the formal proc~s~ to adopt the rules as "permanent rules" under the

A,PA. With regard t~ the BNF, the initial version of the rule did not elcpressly define the

BNB', and as a result, the JLC:A.R entered a preliminary objection to the rule "based on the

failure to specify the c~lculati,Qn used in the application of a ̀budget ne~~trality provision."'

Def:'s Past-Trial~Ib'lem. at g. Tlie JLCA1i did.not object to implementation of the Cost Cap

rule. However, as a result of the JLCAR's objection to the BNF, DHHS added a definition:

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The budget neufirality factor zmeans the adjustment to rates made by thedepartment to accommodate the difference between the allowable[M]edicaid cost and. acuity based .rates derived from fih~e nursing facility1Vledicaid acuity rate setting system, ~vhieh nursing. facilities incur inprodding care to Medicaid residents, and thQ amount which the state hasbudgeted in order to fund that care.

Dept. of Health and Hum. Services, Admin. R. H.e-E 806.31(p). At the same time DHH~

sought to promulgate the rules under the AP.A, a bill tiefinir~g the BNF was pending in the

legi5'lature. t~lthou~h JI,CAR enfiered. a final objection to the B1uF on May 22, 200'7,

JLC.A:R'~ motives for doing so are apparent from the transcript of the 1VIay 18, zoos

hearing where Representative ~chrriiclt provided,

The point I warit~d to mike is that or the question Y want to make is sincethe ~ena~te is d~Irb~r~tin~ [the BNB], is about tci ti~liber~te it, if we~ ~ri'ter afinal objection hers end tie ~~nate eoriaes lia~k wifih language wl~ich clarifiesit ~h~n the House would lave a bite at tlzafi. ~o final objecfiion~ leaves us outof ifi and lets the senate e~cpress its will and thin gives ~ a chance to eitherapprove fihat or — or ask for some kind o'Fbifurcation in conference.

Def.'s Ex. II. T1~i~ sentiment was supported by other members of JLC:E~R, eP Def 's Ex. II.

In short, bayed upon policy considerations, JLCAR did not want to interfere with the

legi~lattiz~e's determination of~fihe definition of tine BNF: DHHB adopted permanent rules

r~lat~ci to the Cost Cap and BNF on 11>Ia~ 2g, 200 . The bill defiining tli~ BI~T~' never

passed, and He-~ vv~as readopted.ira 2oog with no objection from JLCAI~. The current

rules c<~ntain both the Cost Ca.p and the BNF. See N.H. Admin. Mules ~Ie-E 806.31

(h)(~)C~), G)(3), (0)(3), (~)•

The plaintiff argues that both the Cost dap aid BNF, which were promulgated in

accordance with the APA on May 25, 2007, still did nat cure the breach of cQntraet and axe

still illegal because "DHH~ simply copied the tent of the e3nergency rile and adopted the

same as a final rule." P1.'s Trill Mem: at 1~. Tts reasoning. stems from language in RS.P~

54~-A: i8, TI, which provides, "An agency may propose a permanent rule on the same '

subject at the same time that it adopts an emergency rule, but it shall not adopt the same

emergency rule when the emergency rule expires." Under the Plaintiff s reacling, an

agency may not implement the same language previously used in an emergency rule in

the text of the permanent rule. The Court, however, cannot accept such a reacling. A plain

reading of the rule dennonstrates that the legislature was merely attempting to prevent an

agency from adopting another emergency role whin the initial emergency rule expires

after ~.8o days. To assert fihat the provision should be read to preclude an agency from

adopting the same language is both illogical and unsupported by a plain reading of the

statute. See Mate v. Howland, i25 N.H. 497 5O2 (1984) (finding that courts construe

sfiatutes logically). Thus, the Court finds that DHHS's enactment of the permanent rules

was not illegal under RSA ~4~:A:i8, II. .

The PlainrifF also attacks the Cost Cap and BNF substantively, Tt maintains that: (1)

the Cost Cap violates RSA 1~1-E:6, II because it institutes across the board reductions

irrespective of whether the Plaintiff runs an efficient facility;. (z) that DHHS applied the

Cost Cap to costs incurred long before fine cap was instifiuted; and (3}that the BNF is

substantively flawed.because "[i]t remains unclear how the BNF is calculated, what

assumptions are used, how those assumptions are generated, and what, if any, mechanism

ensures that providers such as [the Plaintiff] are receiving the proper rate for each six-

month period." Pl.'s Trial Mem. at ~g. First, if DHHS applied the Cost Cap before the rule

was promulgated under the APA, such an application is unlawful and a breach of the x992

agreement. However, that is a question for the Court when determining damages and

does not mean that the Cap continues to be illegal after promulgation under the .A.PA.

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Second, with regard to the Cost Cap'S failure to effectuate the purpose of the acuity-based

system, the Courk finds to the contrary. 'Phe JLCAR took no issue with its passage as a

basis for rule-setting. Moreover, it has been adopted as a portion of the state plan by the

CMS. The same reasQning.applies with respect to the BNF. In fact, at trial., witnesses

testified thafi fihe BNF, in its ourrerit state, is reasonable. 'phis Court is in no po~ifiion to

make a contrary judgment.

But perhaps most importantly, the Flaintiff s argumenfis about the substantive

validity of the cost cap and fihe BNF are for practical purposes inconsistent with the New

Hampshire Supreme C+aurt's conclusion in Bel-Air Y, fiha~ the BNF and the cost cap were

not applicable to it because of the lack of compliance with the APA. Once fine rules were

promulgated and fihe rules were acceptable to CMS, th~:n the Plaintiff could make a

reasoned decision wh~th~r to participate or not participate in the program. The Plaintiff

h~e1 no vested right to and form o~ payment, other tT~an payment in conforriaance with

controlling feeleral anti state law, and the modification of the agreement was permissible.

Therefore; whin D.HHS promulgated ifis rules under the APA in May 200 , it was no

longer in breach of fihe igg~~ provider agrEement.

Lapsing Funds and. Obj~c~ion tci HB ~2i

The Plaintiff asserts two alternative grounds for finding fi.~ia~ DHHS breached its

implied covenant of good faith and fair dealing: (1) based upon DHHS's decision to allow

surplus f~a.nd~ to lapse to the general fiend; and (2) based upon DHHS's opposition to

House Bi1t X21—a bill which would allow for surplus Medicaic~ funds to be non lapsing.

T'he Court cannot say ~liat conservatively predicting utiii~ation rates or any other rate-

s~tting measurement is a breach of the duty of good faith and fair dealing, However, in

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this case the Commissioner did more than estimate conservatively. The BNF ~v►~as

specifically designed to ensure tk~afi payments to the providers did not exceed the amount

of money approgriafied. W hen the Commissioner chose to lapse funds appropriated by the

Legislature fio pay the providers an amount which was already below the costs determined

by formula without BNF, he violated the implied covenant of good faith and fair dealing

inherent in evezy New Hampshire contract. Indeed, DHHS is collaterally estoppel from

contending otherwise because this Count in Chase Home for Children v. De~'t Health and

Human services, Merrimack County Superior Court, No. 2oo~-EQ-oo48~~(May 4, 2oio)

Order, Sullivan, J.) specifically held fihat the Commissioner violatEd the covenant of good

faith and fair dealing when he lapsed money from unspent allocations ir~t~ncled by the

legislature to pay providers. The fact that the Chase Hame case is under appeal does not

affect fine preclusive effect of the Chase Home ruling. ee Rest~~fiemenfi (Second) of

Judgmenfi~ § x3, at Commsrit (fl.

However, the Court finds that DHHS's opposition to HB ~2x was not a breach of the

implied~obligation of goad faith and fair dealing.. The Couxfi notes that DHHS did not

oppose the bill on the grounds that Medicaid providers should not receive any of the left

over funds. Instead, it "recommended to fine legislature that the surplus money be

brought forward to the next fiscal yeax.'s rates, which would avoid the necessity of going

through the State plan amendment process with CMS." See Def.'s Post-Trial Me~m. at i~.

The amendment process was a concern primarily because I~HHS was afraid that CMS

would take another look at MQIP and poteriti~lly risk the viability of the program.

Because of this concern, the Court finds that DHHS had valid reasons to seek an

alternative fio legislation that would not require it to amend the st~fie plan, and it did not _

violate its duty of goad faith and fair dealing as a result. And in any event, the DHHS's

opposition to, HB ~2~ did not succeed in stopping its passage.

"The purpose of awarding compensatory damages in a breach of contract action. .

.is fio place the plaintiff in the position the plaintiff would have occupied absent a

breach." ~ncord HcaSp. ~. N.I-~. Med. Malpractice ~Toint Undez~vritn~;Ass'n, z42 rT.H.

fig, 61(x997) ~ a~ ~~~~~~nt Second of Contracts § 347 (ig8x}. "The party

peeking damages in a contract action has the burden of proving the extent and amount

of damages sustained as a resulfi of the breach." Id.

The Court believes that Bel Air is entitled to fihe full amount of the expenses

incurred in providing pare without deduction fQr the BNF and the c+~st cap until

lAecernber 2ov~, whin the permanent rule went into effect. Because the Plaintiff is .

entitled to the full amount of the funds allocated until that time, the failure to pay lapsed

fund~.through that date is irrelevant. Because the New I-~ampshire Supreme court has

held that the Governor and the Commissioner of DHHS did not act illegally in reducing

DHHS expenditures for fiscal year 200$ by reducing DHHS expenclitures far fiscal year

aoo8, which had the effect of eliminafiing benefits that Bel-Air expected to receive, it is

not entitled to any damages for lapsing during and after the fiscal year encling June 30,

aoo9.

Finally, the Court declines ~o award attorneys' fees. The Plainfiif~ seeks fees on

the "substantial benefit" theory. Damages. under that theory are only available whey the

:actions of a plaintiff confer a substantial benefit on citizens. Simonsen v. D~r~v, X45

N.H. 3~2, 387-88 (z000). Here, no provider~but Bel Air will benefit~from this Court's

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ruling, and ~as a resulfi, such an award would be improper.

As noted above, the Plaintiff is instructed to file a g-page memorandum on the

issue of the damages it is entitled to fox the period between when the Cost Cap and BNF

were originally utilized through December 2007, when the Cost Cap and BNF were

legally adopted according try the procedures of the APA. The Plaintiff shall file the

memorandum no later. than 10 days after receipt of this order. Subsequently, DHH~ will

have xo days to respond fallowing its receipt a~~the Flaintiff's damages memorandum.

DHHS'~ memorandum shill also be limited to ~ pages.

SC3 O~2.D:ERED.

~~ l~~~a ~~~~~~7 ~ ~~~~~-~~Dt~TE ~ Richard B. McNamara,

Presiding Ji~stice

RBM/inrs ..

rs;