Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

AGO 1956 No. 222 -
Attorney General Don Eastvold


Portion of Section 13, Chapter 273, Laws of 1955 (RCW 74.09.120) requiring nursing homes to justify rates charged is constitutional.  Extent of inquiry requested by department is limited to information which reasonably relates to cost of operation of nursing home, which affects charge to state for care of recipients of public assistance and medical indigents. 

Absent express contract, department not empowered to make retroactive payments to nursing homes on the sole basis of facts hereafter determined relating to costs of operation hereafter determined by Department of Public Assistance.

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                                                                  March 12, 1956 

Honorable Edward F. Harris
State Representative
Seventh District
Old National Bank Building
Spokane, Washington                                                                                                              Cite as:  AGO 55-57 No. 222

 Dear Mr. Harris:

            You have requested our opinion as to the constitutionality of a portion of section 13 of chapter 273, Laws of 1955 (RCW 74.09.120); and further, if in our opinion said portion of the law is constitutional, you inquire with regard to how far the department of public assistance may go in requiring the nursing homes to provide cost figures.  The portion of the statute in question reads as follows:

             "Any nursing home when requested by the division of medical care shall supply such information as necessary to justify this rate."

             [[Orig. Op. Page 2]]

            Inquiries designated in your letter as 2 (a) and (b) appear to relate directly to the latter portion of your first inquiry and are discussed in our analysis.

            You have further requested our opinion on the following question:

             "In the event either type cost survey should show that the homes were not receiving their costs of operations, is the department empowered to make retroactive rate increases out of current or future appropriations?"

             Our answer to the first part of the first question is in the affirmative.  Our answer to the second portion of your first question and your second general inquiry is contained in the following analysis.  Our answer to your third question is in the negative.


             In determining the constitutionality of the part of the provision in question, the nature and extent of the duties of the department of public assistance must be established as they relate to the fixing of rates for care furnished by nursing homes to be paid by the state of Washington.

             Chapter 273, Laws of 1955, transferred the medical care program from the department of health to the department of public assistance effective July 1, 1955.  The stated purpose of the act was to provide for a more efficient administration of medical, dental and allied services to recipients of public assistance and medical indigents (RCW 74.09.020) who shall be entitled to such medical services as are defined by the department after consideration of the recommendations of the welfare medical care committee.  RCW 74.09.070.  The department is required to provide for necessary physicians' services and hospital care and may provide other services, including nursing home care, after consideration of the appropriations made available.  RCW 74.09.090 (4).  Where nursing home care is furnished by the state, the department is required to purchase such care by contract or at not more than the minimum ward rate (RCW 74.09.100), and where it is purchased on a contract basis may negotiate either with an individual or a group.  RCW 74.09.080.  The department is authorized to promulgate rules and regulations specifying the  [[Orig. Op. Page 3]] minimum standards of care to be provided by the various vendor groups (RCW 74.09.130), and shall biennially provide the social security committee, the governor and the legislature with a full statistical and financial analysis of the program, setting forth the amount of service provided, utilization and expenditures by groups served and the kind of services provided, and other pertinent information.  RCW 74.09.140.

             The foregoing provisions are quite clearly declaratory of the limitations on expenditures of state funds as provided by §§ 5 and 7, Art. VIII, of our state constitution.  These sections, as interpreted by our supreme court in the cases of Morgan v. Department of Social Security, 14 Wn. (2d) 156, 127 P. (2d) 686; and State v. Guaranty Trust Company, 20 Wn. (2d) 588, 148 P. (2d) 323, prohibit the state from giving any money or property to or in aid of any individual, association, company, or corporation, except for the necessary support of the poor and infirm.  The department is therefore charged with the responsibility of expending from the appropriation only those funds which are necessary for the care and support of recipients of public assistance and medical indigents and to maintain complete records and statistics relating to such expenditures for the perusal of the legislature.

             Can the responsibility of determining the amount of assistance which is necessary for the support of indigent persons requiring nursing home care be delegated by the legislature?  The courts have uniformly upheld the right of the legislature to delegate to administrative officers or boards the power to determine facts or state of things upon which the application of the law is made to depend, provided the law enunciates a standard by which the officers of boards must be guided.  The most recent statement of this principle in the field of public assistance is found in the case ofSenior Citizens League v. Department of Social Security, 38 Wn. (2d) 142, 152, 228 P. (2d) 478.  The court found that there was no unlawful delegation of legislative authority to the department where the statute required the department to meet "need" and defined "need" as an amount "as measured by the standards of the department."  The guides provided by the legislature which were dealt with by the court there are in substance the same guides provided by the laws under which the public assistance program is currently administered.

             The following statement from 42 Am. Jur. 323, Investigatory and Inquisitorial Powers, § 31, expresses the general rule regarding powers ordinarily conferred on administrative agencies or boards:

              [[Orig. Op. Page 4]]

            "Investigatory or inquisitorial powers, power to inspect or to secure or to require the disclosure of information by means of accounts, records, or otherwise, are conferred on practically all boards and commissions as an adjunct of their regulatory powers.  In fact, the power and facilities of administrative agencies to investigate, initiate action, and control the range of investigation is one of the distinctive functions which sets them apart from the courts . . ."

             It is generally recognized that the legislative guide need not be as specific in those situations where it is difficult or impracticable to declare a definite, comprehensive rule or where the discretion to be exercised by an administrative office relates to a regulation imposed for the protection of health and general welfare or where, as compared to a delegating of authority to regulate business generally, the legislature delegates authority to an administrative body created for a particular purpose.  Senior Citizens League case, supra; 11 Am.Jur. 948; Kelleher v. Minshull, 11 Wn. (2d) 380, 119 P. (2d) 302; 73 C.J.S. 329.  As pointed out in theKelleher case, supra, statutory provisions using the formulae "public convenience and advantage," "public necessity," and similar expressions have been sustained in a legion of cases as not clothing an administrative agency with arbitrary powers, uncontrolled by any prescribed rule of action governing such power; that such expressions are sufficiently definite and certain to permit of administration and do not constitute arbitrary or illegal delegation of authority.

             It would appear that the portion of the statute in question as it relates to the entire duties and responsibilities conferred on the department by the legislature, does not constitute an illegal delegation of legislative power.

             Has the state the power to condition the right of a nursing home to receive payment for services rendered needy persons from the state in the absence of a contract express or implied?  We have been unable to find any cases touching on this point as it applies to the payment by the state for services rendered recipients of public assistance or medical indigents.  However, it would appear that the right of the state, as it applies generally to public work done for or on behalf of the state, would apply in the instant case.  InJahn v. Seattle, 120 Wash. 403, 207 Pac. 667, our supreme court reiterated the principle of law followed in earlier cases and cites from United States Supreme Court case ofAtkin v. Kansas, 191 U.S. 207, 24 S.Ct. 124, as follows:

              [[Orig. Op. Page 5]]

            ". . . It belongs to the state, as the guardian and trustee for its people, and having control of its affairs to prescribe the conditions upon which it will permit public work to be done on its behalf, or on behalf of its municipalities.  No court has authority to review its action in that regard.  Regulations on this subject suggest only considerations of public policy.  And with such considerations the courts have no concern."

             We have considered the various other grounds upon which the constitutionality of a statute of this type may be challenged but find that an analysis thereof lends nothing to our ultimate conclusions.  In our opinion the portion of section 13, chapter 273, Laws of 1955, in question herein is constitutional.

             In answer to your inquiry as to how far the department can go in requiring the nursing home to provide cost figures, it should be pointed out that no cases have been located which lend any direct aid to our conclusion.  However, in the absence of a detailed statutory guide as provided under the law relating to public utilities (RCW 80.04.080 et seq.), the general prohibition against unreasonable and arbitrary requirements would appear applicable.  Where the department has required justification of the rate charged by a nursing home be made on the basis of a "cost report" submitted by the nursing home, the detail thereof should be such as to adequately apprise the department of the costs of operation as they relate to the type and extent of care given recipients of public assistance and medical indigents.  All information which the department requires be contained in such a report must reasonably reflect such costs as they relate to the care of persons eligible for public assistance, including medical care.  The department cannot properly require data from the nursing homes which in no way reasonably affect the cost of care to recipients of public assistance or medical indigents, as where the inquiry pertains solely to private matters or completely independent business enterprises.  To apply the "reasonable" test to either exhibit "A" or "B" requires a closer scrutiny of all the facts, and on the basis of the information made available to us at this time we cannot properly conclude as to the reasonableness or unreasonableness of the exhibits.

             Although the department has a duty to determine and expend only those funds which are necessary for nursing home care, it also has the duty of assuring recipients of public assistance and medical indigents that such care will be furnished where the medical care appropriation permits.  The right of the state  [[Orig. Op. Page 6]] to condition the manner in which private enterprise engages in business for or in behalf of the state does not permit the latter to impose conditions which result in a failure to consummate the work or service which by law is to be made available to the general public or specified groups.  In this regard it behooves the department to require only those reports which impose no excessive burden on the nursing home operator nor discourage continued operation of nursing homes, with resultant hardship to needy individuals or increased expenditures of state funds.

            Referring to your inquiry with respect to geographical scope of the inquiry, we find no provision in the law requiring the department to establish uniform statewide rates for nursing home care furnished recipients of public assistance or medical indigents, and the following portion of section 13, chapter 273, Laws of 1955 (RCW 74.09.120), appears to permit the establishment of rates on an individual basis:

             "The division of medical care shall purchase nursing home care by contract or at not more than the minimum ward rate of each nursing home."

             Such a provision clearly permits the department to make several surveys or inquiries for the purpose of obtaining justification for rates charged for nursing home care, and a survey confined to the Spokane and Eastern Washington area for direct submission to the department would be proper under the law.

             You have inquired as to the department's power to make retroactive payments to nursing homes in the event it is determined that nursing homes have not been receiving their cost of operations from the state for the care of recipients of public assistance and medical indigents.

             The portion of section 13, chapter 273, Laws of 1955 (RCW 74.09.120), hereinabove cited, places no minimum on payments made by the state to nursing homes for the care of eligible recipients.  Without discussing or analyzing other statutory limitations on expenditures of state funds, and in the absence of an express contract, it is our opinion that the public assistance laws generally, and specifically the provision hereinabove referred to, do not empower the department of public assistance to make retroactive payments to nursing homes solely on the basis of information hereafter received indicating that nursing homes in the past had not received their cost of operation.

              [[Orig. Op. Page 7]]

            Your letter of inquiry and information received from the department indicate that no final determination has been made as to the content of the reports to be required by the department.  If the presence of a member of this office is desired at future negotiation meetings, we shall make every effort to attend and lend whatever assistance is possible in arriving at a just and reasonable "cost report," to the end that the nursing home operators will be property reimbursed for their services and the state will continue to discharge its responsibilities to the needy persons who require such care.

 Very truly yours,
Attorney General 

Assistant Attorney General