Judge dismisses suit BMC filed versus state

Hospital fights Medicaid cuts

By Kay Lazar
Globe Staff / December 23, 2010

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A Suffolk Superior Court judge has dismissed Boston Medical Center’s lawsuit against the state, which accused officials of illegally cutting payments made to the hospital for treating thousands of poor patients.

Justice Judith Fabricant ruled in a Dec. 20 opinion, made public yesterday, that neither state nor federal laws authorize the courts to review the Medicaid payment rates set by the state’s secretary of health and human services, Dr. JudyAnn Bigby.

Boston Medical contended in its suit filed last year that the state financed its landmark health insurance law on the backs of poor residents by cutting payments to the hospital, the state’s largest provider of medical care to low-income families.

Fabricant wrote that she does not “discount the seriousness’’ of Boston Medical’s financial problems, but added that federal Medicaid laws do not guarantee the “economic well-being of any particular provider.’’

Fabricant noted that many other institutions that provide vital services, including state government, are suffering under “extreme economic pressure,’’ yet that fact, she said, did not confer on the court the power to order a “reallocation of the limited public resources available.

“If there is a solution to the problem,’’ Fabricant wrote, “the place to find it is in the political branches of government, not the courts.’’

Boston Medical laid off 119 nurses and managers in September and used cash reserves to make ends meet. It had projected a loss of up to $175 million for its fiscal year, which ended Sept. 30, and said it might be forced to make a much larger reduction to its nearly 6,000-member staff or consolidate services with another provider.

But Boston Medical recently received a financial reprieve when the state negotiated extra money for BMC and other safety-net hospitals over the next two years from the federal government. Under that agreement, Boston Medical received $90 million for 2010 and will get another $90 million in 2011.

Spokeswoman Jennifer Watson said yesterday that the hospital was still reviewing the ruling but was pleased that the court recognized BMC’s “mission to serve all without regard for ability to pay.’’ She said the ruling left unanswered a pressing issue.

“It’s still critical that we resolve the long-term issues of how Boston Medical Center is paid for the care we provide,’’ Watson said. “The $90 million was certainly significant for the hospital, but, even with those payments, we expect to incur a $25 million loss for fiscal year 2010 and a similar loss for fiscal year 2011.’’

She said the hospital is involved in an “ongoing dialogue’’ with the state on the longer-term prospects for payments.

The court also dismissed a similar lawsuit filed by five community hospitals that also treat many poor patients: Berkshire Medical Center, Quincy Medical Center, Merrimack Valley Hospital, Cape Cod Hospital, and Brockton Hospital.

Bigby said in a statement that she was pleased the court dismissed the lawsuits. “We recognize the important role that these hospitals play in our health care system and look forward to continuing to work with them to ensure continued access and quality care’’ for Medicaid beneficiaries, she said.

Bigby’s office declined a request to discuss how it intends to deal with the issue of hospital Medicaid payments in the long term, but issued a follow-up statement. “As we take steps toward developing a new way of paying for health care, we recognize the important role that safety net hospitals will continue to play in the health care system,’’ it said.

Kay Lazar can be reached at