Windsor House, Inc. v. Ohio Dept. of Job & Family Servs.

SUPREME COURT CASES

Laws-info.com » Cases » Ohio » 10th District Court of Appeals » 2011 » Windsor House, Inc. v. Ohio Dept. of Job & Family Servs.

State: Ohio

Court: Ohio Southern District Court

Docket No: 2011-Ohio-6459

Case Date: 12/15/2011

Plaintiff: Windsor House, Inc.

Defendant: Ohio Dept. of Job & Family Servs.

Preview:[Cite as Windsor House, Inc. v. Ohio Dept. of Job & Family Servs., 2011-Ohio-6459.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Windsor House, Inc.,                                                                           :
Plaintiff-Appellant,                                                                           :
v.                                                                                             :                                       No. 11AP-367
                                                                                                                                       (C.C. No. 2010-04815)
Ohio Department of Job and Family                                                              :
Services,                                                                                                                              (REGULAR CALENDAR)
                                                                                               :
Defendant-Appellee.
                                                                                               :
D  E  C  I  S  I  O  N
Rendered on December 15, 2011
Chester  Willcox  &  Saxbe,  LLP,  Geoffrey  E.  Webster  and
Clint B. Charnes, for appellant.
Michael DeWine, Attorney General, and Velda K. Hofacker
Carr, for appellee.
APPEAL from the Court of Claims of Ohio
TYACK, J.
{¶1}   Appellant,  Windsor  House,  Inc.                                                       ("Windsor  House"),  a  nursing  home
operator in Trumbull County, filed a complaint in the Court of Claims of Ohio, seeking
payment for capital costs and services that it provided to its residents, including Medicaid
recipients.   Appellee, the Ohio Department of Job and Family Services ("ODJFS"), filed a
motion in the Court of Claims seeking dismissal pursuant to Civ.R.  12(B)(6), on the
grounds that Windsor House did not file its complaint timely, that the savings statute did

No. 11AP-367                                                                                     2
not apply, and that the action was duplicative of another pending action.   The Court of
Claims denied the Civ.R. 12(B)(6) motion but sua sponte dismissed the action for lack of
subject matter jurisdiction pursuant to Civ.R. 12(H)(3), reasoning that Windsor House's
claim was one for reimbursement of compensation allegedly due under a statute and not
one for money damages.  This appeal followed.
{¶2}   Before  addressing  the  basis  of  the  claim  and  the  nature  of  the  relief
requested, we elect to examine the facts as set forth in the complaint and the procedural
history in order to address ODJFS' contention that the complaint was barred by the
statute of limitations, that the savings statute did not apply, and that the complaint was
duplicative.
{¶3}   Windsor  House  operates  a  nursing  home  known  as  O'Brien  Memorial
Health Care Center ("O'Brien").   ODJFS is the state agency charged with administering
the Medicaid Program in Ohio.   On June 14,  2005, Windsor House mailed ODJFS a
request for prior approval for reimbursement of capital costs associated with a non-
extensive renovation ("NER") in the amount of $1,491,410.58.   The request was returned
for  lack  of  a  forwarding  address  on  June  28,  2005.    On  June  29,  2005,  O'Brien's
representative   contacted   the  head  of   the   department   section   responsible  for
consideration and approval of NER requests.   O'Brien then mailed its request to the new
address it obtained from ODJFS, where it was received on June  30,  2005.    ODJFS
advised  O'Brien's  representative  that  there  would  be  no  issue  of  timeliness  as  the
department had received the request and would process it.
{¶4}   On July 11, 2005, ODJFS notified O'Brien that its request for prior approval
had been granted.    However, in August of  2006, ODJFS reversed that decision and

No. 11AP-367                                                                                     3
denied the request.   In a subsequent letter denying O'Brien's appeal of the decision,
ODJFS cited Am.Sub.H.B. Section 606.18.06, paragraph (B)(6)(a), stating that the statute
required approval of the NER before July 1, 2005.   Since the request was not granted
until  July                                                                                      11,  2005,  ODJFS  determined  that  O'Brien  did  not  qualify  for  the  Capital
Compensation Program.
{¶5}   Windsor House and two other nursing home operators filed a complaint
against ODJFS in the Franklin County Court of Common Pleas on January  4,  2007.
Windsor House sought a declaration that ODJFS was obligated to consider its request for
reimbursement as timely and to adjust its rate to include its capital costs.   The court of
common pleas granted a motion to dismiss filed by ODJFS, but did not file a dismissal
entry with respect to Windsor House.
{¶6}   While the common pleas court action remained pending, Windsor House
filed  a  complaint  in  the  Court  of  Claims  asserting  essentially  the  same  claim  for
declaratory relief along with claims for breach of contract, unjust enrichment, negligence,
promissory estoppel, and false pretenses arising from the same set of facts.    In the
February 20, 2009 complaint, Windsor House asserted it was filing its Court of Claims
action pursuant to Ohio's savings statute, R.C. 2305.19.   ODJFS moved to dismiss the
claim for failure to state a claim upon which relief could be granted on the grounds that
the complaint was untimely.   The next day, on March 25, 2009, Windsor House filed a
Civ.R. 41(A) notice of voluntary dismissal of its claims in the earlier court of common
pleas action.
{¶7}   The Court of Claims dismissed Windsor House's complaint on June  8,
2009.   The Court of Claims found the savings statute inapplicable because the complaint

No. 11AP-367                                                                                     4
had been filed before the dismissal of the common pleas court action.   In addition, the
Court of Claims found that the common law breach of contract claim was barred by the
statute of limitations contained in R.C. 2743.16(A), and that the claims were based on an
alleged right to reimbursement.
{¶8}   Windsor  House  appealed  from  the  Court  of  Claims'  dismissal  and,  on
January  28,  2010, this court affirmed the dismissal on the grounds that the savings
statute did not apply, and therefore the claims were barred by the two-year statute of
limitations in R.C. 2743.16(A).   Windsor House, Inc. v. Ohio Dept. of Job & Family Servs.,
10th Dist. No.  09AP-584,  2010-257,  ¶13  ("Windsor House I "). The fact that Windsor
House commenced its action in the Court of Claims before voluntarily dismissing the court
of common pleas action made the savings statute inapplicable.   This court discussed the
issue of alleged lack of subject matter jurisdiction, but stopped short of ruling on that
particular issue, determining that it was rendered moot by the issue of timeliness.  Id.
{¶9}   Windsor House appealed to the Supreme Court of Ohio, which declined to
hear the appeal on May 26, 2010.   Windsor House, Inc. v. Ohio Dept. of Job & Family
Servs., 125 Ohio St.3d 1442, 2010-Ohio-2212.
{¶10}  Meanwhile, on March 18, 2010, Windsor House, using the savings statute,
filed its second Court of Claims complaint, which is the subject of the current appeal.   Its
claims were essentially identical to those of the earlier case except it dropped its claim for
declaratory relief.   On April 21, 2010, ODJFS filed a motion to dismiss pursuant to Civ.R.
12(B)(6) asserting that the complaint was not timely, that the savings statute did not
apply, and that the action was duplicative.   The Court of Claims denied the motion to
dismiss, but sua sponte dismissed the complaint for lack of subject matter jurisdiction.

No. 11AP-367                                                                                    5
Specifically, the court held that all the claims were premised on the failure of ODJFS to
grant Windsor House capital cost reimbursement pursuant to a statute.   In other words,
the court held that it lacked subject matter jurisdiction because Windsor House had not
stated a claim for money damages against the state.
* * * In any action that is commenced * * * if the plaintiff fails
otherwise  than  upon  the  merits,  the  plaintiff                                             *   *   *  may
commence a new action within one year after the date of * * *
the plaintiff's failure otherwise than upon the merits or within
the  period  of  the  original  applicable  statute  of  limitations,
whichever occurs later. * * *
{¶11}  "The right to voluntarily dismiss a claim under Civ.R. 41(A) has been upheld
even where the notice of voluntary dismissal is filed after the court announces its intention
to rule in favor of the opposing party, but before the judgment entry journalizing that
decision is filed."   Windsor House I at ¶17, and cases cited therein.   Therefore, as this
court held in Windsor House I, Windsor House was entitled to voluntarily dismiss its
claims in the court of common pleas action despite the court's decision granting ODJFS'
motion to dismiss.   Id.   The March 25, 2009 voluntary dismissal was a failure otherwise
than upon the merits.    Since Windsor House filed the present action in the Court of
Claims on March 18, 2010, it commenced the new action within one year after its failure
otherwise than upon the merits.
{¶12}  After reviewing the record and the various filing dates, we find that Windsor
House correctly utilized the savings statute and filed its complaint within one year of a
prior dismissal other than on the merits.   When this court found that the savings statute
was inapplicable to the first Court of Claims case, it necessarily follows that the instant

No. 11AP-367                                                                                      6
matter is the first instance of Windsor House using the savings statute.   Therefore, the
Court of Claims was correct to deny ODJFS' motion to dismiss for failure to state a claim.
{¶13}  On appeal, Windsor House has asserted the following assignment of error:
The Court of Claims erred in sua sponte dismissing plaintiff-
appellant Windsor House, Inc.'s complaint for lack of subject
matter jurisdiction.
{¶14}  Our standard of review is de novo for a judgment dismissing a complaint for
lack of subject matter jurisdiction.   Windsor House I at ¶8.  To dismiss a complaint for lack
of subject matter jurisdiction, the court must determine whether the complaint states any
claim that the court has the authority to decide.    Id. at  ¶9.    The court may consider
pertinent materials outside of the complaint and is not confined to the allegations of the
complaint.  Id.
{¶15}  The Court of Claims is a court of limited jurisdiction.    It has exclusive
jurisdiction over civil actions against the state for money damages that sound in law.   R.C.
2743.02 and 2743.03.   Included within the jurisdiction of the Court of Claims are civil
actions presenting claims sounding in equity if they arise out of the same circumstances
giving  rise  to  a  civil  action  over  which  the  Court  of  Claims  otherwise  would  have
jurisdiction.   Measles v. Indus. Comm., 128 Ohio St.3d 458, 2011-Ohio-1523 ¶ 7; Interim
Healthcare of Columbus v. Ohio Dept. of Admin. Servs., 10th Dist. No. 07AP-747, 2008-
Ohio-2286,                                                                                        ¶13.    In  determining  whether  the  Court  of  Claims  has  subject  matter
jurisdiction, it is necessary to examine both the nature of the claim (whether it sounds in
law or equity) and the relief sought (whether compensation for an injury to one's person,
property, or reputation, or specific relief such as the recovery of specific property or
monies).   Ohio Hosp. Assn. v. Ohio Dept. of Human Servs. (1991), 62 Ohio St.3d 97,

No. 11AP-367                                                                                         7
104; Measels at ¶9; Zelenak v. Indus. Comm., 148 Ohio App.3d 589, 2002-Ohio-3887,
¶15-18.
{¶16}  In general, a claim for restitution relating to a contract dispute constitutes an
action in law.   Measles at ¶9, quoting Ohio Hosp. Assn. at 104 ("The claims for violation
of the provider agreements and an earlier settlement agreement are within the exclusive
jurisdiction of the Court of Claims to the extent that [plaintiffs] alleged that their contractual
rights have been violated and seek monetary relief"); see also Cristino v. Ohio Bur. of
Workers' Comp., 118 Ohio St.3d 151, 2008-Ohio-2013, syllabus ("A claim against the
state for money due under a contract is not a claim of equitable restitution and must be
brought in the Ohio Court of Claims.").
{¶17}  An action for restitution is one in which money identified as belonging in
good conscience to a plaintiff could clearly be traced to particular funds or property in the
defendant's possession.   Cristino at ¶8.   In Great-West Life & Annuity Ins. Co. v. Knudson
(2002), 534 U.S. 204, 212, 122 S.Ct. 708, the United States Supreme Court held that a
distinction existed between a claim for a contractual obligation to pay past due sums and
a claim that the government had failed to reimburse it for past expenses pursuant to a
statutory obligation.   Thus, "a claim that seeks to require a state agency to pay amounts it
should have paid all along is a claim for equitable relief, not monetary damages."   Interim
Healthcare at ¶17, citing Zelenak at ¶19.   "If the essence of a claim is not of restitution for
money owed under a contract, but instead restitution for the state's unjust enrichment by
withholding funds to which a worker had a statutory right, then the ultimate relief sought is
equitable restitution."   Measles at ¶9.   Similarly, in Ohio Hosp. Assoc., the Supreme Court
of Ohio held that a Medicaid provider with a statutory right to Medicaid reimbursement

No. 11AP-367                                                                                     8
could bring an equitable claim for Medicaid funds that had been withheld pursuant to an
invalid administrative rule.   Id. at paragraph three of the syllabus ("The reimbursement of
monies withheld pursuant to an invalid administrative rule is equitable relief, not money
damages.")
{¶18}  At times, creative pleading may obscure the conceptual line between claims
for money damages for loss sustained and claims for a specific form of relief.   Zelenak at
¶15.   The prayer for relief does not, in itself, establish subject matter jurisdiction in the
Court of Claims.   See Id.   Here, Windsor House characterizes the complaint as one for
money damages separate and apart from statutory reimbursement.    Windsor House
asserts that it has stated legally cognizable claims for money damages sounding in tort,
breach of contract, and equity.
{¶19}  We disagree.   The nature of Windsor House's complaint is one for statutory
entitlement to funds.   The claims for unjust enrichment, negligence, promissory estoppel,
and  false  pretenses  are  premised  upon  a  right  to  reimbursement  as  set  forth  in
Am.Sub.H.B. No. 530, effective June 30, 2006, concerning capital cost reimbursement.
With respect to the breach of contract claim, we agree with the Court of Claims that the
only contract involved in the dispute is the provider agreement that authorizes Windsor
House to act as a provider.   Nowhere in that agreement is there any provision concerning
Windsor House's claim for reimbursement of capital costs associated with an NER.   This
distinguishes the instant case from Ohio Hosp. Assn. in which the claims for breach of
provider agreements and breach of an earlier settlement agreement were within the
exclusive jurisdiction of the Court of Claims.  Id. at 104.

No. 11AP-367                                                                                        9
{¶20}  In its complaint, Windsor House also states that it is entitled to damages for
interest expense, financing costs, cost of improvements, lost profits, and similar damages
recoverable  for  the  breach  of  contract.    Windsor  House  claims  it  is  entitled  to  the
reasonable value of its continued provision of nursing care and other services to eligible
Medicaid recipients and interest it would have accumulated on that money had it been
properly reimbursed.   In its claim of negligence, Windsor House avers that it does not
seek as damages the amount of compensation a rate adjustment would have paid unless
that is determined by the court to be an adequate measure of damages to assess for
negligence.
{¶21}  Stating in the complaint that plaintiff seeks money damages is not in and of
itself sufficient to confer jurisdiction in the Court of Claims.   Not every claim for monetary
relief constitutes money damages.   Interim Healthcare at  ¶15.   "Even when the relief
sought consists of the state's ultimately paying money, a cause of action will sound in
equity if 'money damages' is not the essence of the claim."   Id.   But see Tiemann v. Univ.
of Cincinnati (1998), 127 Ohio App.3d 312, 319 ("The Court of Claims has jurisdiction
over an action for declaratory and injunctive relief arising out of a civil action against the
state  predicated  upon  the  actions  or  inaction  of  a  state  agency  pursuant  to  R.C.
2743.03(A)(2), and appellees have brought such a suit in the Court of Claims asking for
declaratory, injunctive, and 'any further' relief.").
{¶22}  We  believe  more  recent  pronouncements  concerning  the  distinction
between legal and equitable claims of restitution more accurately reflect the jurisdictional
underpinnings of the Court of Claims.   For example, in Measles, the Supreme Court of
Ohio clarified that a claim for restitution relating to a contract dispute constitutes an action

No. 11AP-367                                                                                        10
at law, but a claim for restitution for the state's unjust enrichment by withholding funds to
which a claimant had a statutory right, is a claim for equitable restitution.
{¶23}  In Cristino, the Supreme Court of Ohio held that the chief factors in deciding
whether a restitution claim sounded in equity or in law are the basis for the plaintiff's
action and the nature of the underlying remedies sought.  Id. at ¶7.
{¶24}  And In Santos v. Ohio Bur. of Workers' Comp., 101 Ohio St.3d 74, 2004-
Ohio-28,  the  injured  parties  sought  to  recoup  money  that  a  state  agency  collected
pursuant to a subrogation statute that later was declared to be unconstitutional.   Because
the  plaintiffs  sought  repayment  of  funds  previously  in  their  possession,  their  claim
sounded in equity.
{¶25}  A review of the recent case law leads us to conclude that we must analyze
both the nature of the claim and the relief sought in order to decide whether the Court of
Claims  has  subject  matter  jurisdiction.    Here,  Windsor  House's  complaint,  although
couched as legal actions for tort and contract, does not set forth a valid claim for relief
under either theory.   Instead, Windsor House's complaint seeks a remedy in equity since
it asserts that it is entitled to certain monies pursuant to statute.   Accordingly, we find that
the Court of Claims was correct in dismissing Windsor House's complaint for lack of
subject matter jurisdiction despite its prayer for money damages.
{¶26}  The sole assignment of error is overruled, and the judgment of the Court of
Claims of Ohio is affirmed.
Judgment affirmed.
BRYANT, P.J., and FRENCH, J., concur.

Download 11ap-367.pdf