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Court of Appeal, Third District, California.

CALIFORNIA ASSOCIATION OF NURSING HOMES, SANITARIUMS, REST HOMES AND HOMES FOR the AGED, Inc., a California non-profit corporation, on behalf of a class of persons too numerous to mention, Plaintiff and Appellant, v. Spencer W. WILLIAMS, Administrator of the Health and Welfare Agency of the State of California, Defendant and Respondent.

Civ. 12230.

Decided: March 24, 1970

Wilke, Fleury, Sapunor & Hoffelt, by Richard H. Hoffelt, Sacramento, for plaintiff and appellant. Thomas C. Lynch, Atty. Gen., by Walter J. Wiesner, Deputy Atty. Gen., Sacramento, for defendant and respondent.


Both parties have filed petitions for rehearing. The nursing homes contend that our opinion is not sufficiently explicit in calling for the adoption of regulations covering nursing home rates from March 1, 1966, the operative date of the Medi-Cal program. The Attorney General expresses his understanding that the writ of mandate will require the Medi-Cal agency to adopt regulations retroactively covering nursing home services rendered on and after March 1, 1966, but that the rates or rate formulae may vary for different periods. The Attorney General is correct.

In his petition for rehearing, the Attorney General contends for the first time that the regulation in question fixes ‘rates, prices or tariffs,’ hence is within the exemption provided by Government Code, section 11380(a)(1).* That section, a portion of the Administrative Procedure Act, exempts certain classes of regulations from the requirement of filing with the Secretary of State and from compliance with public notice and hearing procedures. (See Gov.Code, s 11421.) The contention amounts to a claim that the Medi-Cal agency may adopt rate regulations with no prior notice or hearing. It is at odds with past administrative practices of the Medi-Cal agency, which has habitually filed its regulations with the Secretary of State. These practices are consistent with the law; the claim of exemption is not.

Usually, when a state law directs an agency to promulgate rates or tariffs binding on the public, the same law fixes its own procedure for hearings upon notice to the public. (See, e.g., Pub.Util.Code s 1701 et seq.; Ins.Code, s 11734; State Comp. Ins. Fund v. McConnell (1956) 46 Cal.2d 330, 343, 294 P.2d 440; cf. Estate of Setzer (1961) 192 Cal.App.2d 634, 639, 13 Cal.Rptr. 683.) In this case the Medi-Cal statutes evince a legislative intent to invoke the standard procedures of the Administrative Procedure Act. Thus section 14104 (fn. 3 of the opinion) calls for the adoption of regulations establishing ‘the methods to be used and the items to be included’ in rate formulae. 84 Cal.Rptr. 590. Section 14105 (fn. 4 of the opinion) calls for ‘rules and regulations' establishing policies, which shall include ‘rates for payment for services.’ Under both sections the scope of the agency's regulations is much broader than the Administrative Procedure Act's narrow exemption of rates, prices or tariffs. Although the Medi-Cal agency's regulations deal with rates or establish rate formulae, they are not within the dispensation provided in section 11380(a)(1).

The petitions for rehearing are denied.


FOOTNOTE.  Government Code, section 11380 provides in part:‘Every state agency shall:‘(a) Transmit to the department for filing with the Secretary of State and with the Rules Committee of each house of the Legislature a certified copy of every regulation adopted by it except one which:‘(1) Establishes or fixes rates, prices or tariffs.‘* * *.‘