Case Overview

Decision: State ex rel. LeadingAge Ohio v. Ohio Department of Medicaid, Slip Opinion No. 2025‑Ohio‑3066 (Supreme Court of Ohio, Sept. 2, 2025)

Panel: Per Curiam; unanimous (Kennedy, C.J., and Fischer, DeWine, Brunner, Deters, Hawkins, and Shanahan, JJ.)

Parties:
Relators: LeadingAge Ohio, Ohio Health Care Association, and the Academy of Senior Health Sciences, Inc. (trade associations acting for member nursing facilities)
Respondents: Ohio Department of Medicaid (ODM) and its Director, Maureen M. Corcoran

Relief Sought: Writ of mandamus compelling ODM to recalculate and pay nursing‑home quality incentive payments from July 1, 2023 forward, using the formula in R.C. 5165.26(E)(1)(a) (as amended by H.B. 33), specifically, by applying 60% of the increase in each facility’s rate for direct care costs attributable to rebasing—not 60% of the change in the group “price” (cost per case‑mix unit).

Outcome: Writ granted. Motion to dismiss as moot denied. Motion to amend affidavits denied as unnecessary. Request for attorney fees and expenses denied (waived for lack of argument). Statutory costs taxed to respondents by operation of law.

Note on citations: The opinion consistently interprets and applies R.C. 5165.26. Occasional references to “R.C. 5125.26” appear to be typographical; the operative section is R.C. 5165.26.

Introduction

The Supreme Court of Ohio issued a clarifying and consequential ruling on how the State must fund the nursing‑home quality incentive pool following the 2024–2025 biennial budget (H.B. 33). The General Assembly shifted Medicaid nursing‑home reimbursement toward quality by requiring that 60% of the increase from periodic rebasing be allocated to the quality incentive payment rate, with the remaining 40% to the base rate. ODM implemented this shift by using 60% of the change in the “price” (group‑level cost per case‑mix unit) when computing the pool. The nursing‑home associations contended the statute plainly requires 60% of the change in each facility’s “rate for direct care costs”—a facility‑specific figure that equals the group price multiplied by that facility’s case‑mix score.

The Court agreed with the associations, holding that the statute’s text governs: the 60% factor applies to the change in the rate for direct care costs caused by rebasing, not merely the change in the group price. The ruling compels ODM to recalculate the pool and pay accordingly from July 1, 2023 onward, and signals a strong textualist stance against agency substitutions of legislative formulas based on perceived policy intent.

Summary of the Judgment

• Mandamus standard satisfied: The associations’ members have a right to payments computed by statute; ODM had a clear duty to apply R.C. 5165.26(E) as written; no adequate remedy at law existed (mandamus is the exclusive avenue for such Medicaid payment disputes).
• Statutory holding: R.C. 5165.26(E)(1)(a) unambiguously requires ODM to add, for each facility, “sixty percent of the per diem amount by which the nursing facility’s rate for direct care costs…changed as a result of the rebasing” to the quality‑pool formula. The “rate for direct care costs” is facility‑specific (price × case‑mix score). ODM’s use of only the price increase ignored case‑mix and underfunded the pool.
• Mootness rejected: Although biennial appropriations expire, the statutory formula in R.C. 5165.26 persists. The controversy over proper calculation is live.
• Affidavits: Affidavits stating facts on personal knowledge “or to the best of my knowledge and belief” are not per se inadmissible; courts may parse knowledge‑based statements. The motion to amend affidavits was denied as unnecessary.
• Unclean hands defense rejected: No reprehensible conduct by relators; advocating for statutory compliance is not inequitable behavior.
• Fees and costs: Attorney fees and expenses were waived for lack of argument; costs awarded to relators by statute.

Factual and Procedural Background

Ohio’s Medicaid program reimburses nursing facilities per Medicaid day using a complex methodology. Two components are central here:

• Rate for direct care costs: A facility‑specific per diem amount derived by multiplying the group “price” (cost per case‑mix unit) by the facility’s case‑mix score (reflecting patient acuity/complexity). Price is rebased at least every five years; case‑mix is recalculated semi‑annually.
• Quality incentive payment rate: Facilities receive a per diem supplement based on quality‑measure points, funded from a statewide quality‑incentive pool. The value of a quality point depends on pool size, statewide Medicaid days, and the statewide average quality score.

H.B. 33 amended R.C. 5165.26(E) to prioritize quality by channeling 60% of the increase from rebasing into the quality pool, with 40% applied to base rate increases. ODM recalculated the pool using 60% of the change in the price only. The associations sought mandamus compelling ODM to follow the statute’s text (60% of the change in the rate for direct care costs), effective July 1, 2023.

After denying ODM’s discovery motion and issuing an alternative writ, the Court received evidence and merits briefs, and ultimately granted the requested writ.

Key Statutory Framework

• R.C. 5165.19: Defines the “rate for direct care costs” as the product of group price and the facility’s case‑mix score; price is set by group and adjusted via rebasing.
• R.C. 5165.26(B): Sets the method for distributing the quality pool using statewide Medicaid days, average quality scores, and facility quality points.
• R.C. 5165.26(E): Determines pool size:
  • Starts with a base amount (e.g., $125 million);
  • Adds, for each facility, per‑diem factors multiplied by the facility’s prior‑year Medicaid days;
  • One factor is “sixty percent of the per diem amount by which the nursing facility’s rate for direct care costs…changed as a result of the rebasing” (R.C. 5165.26(E)(1)(a)).
• H.B. 33, § 333.300: To offset the 60% shift to quality, the base‑rate increase is limited to 40% of the increase in the rate for direct care costs due to rebasing.

Issues Presented

• Whether ODM may use the price increase alone (excluding case‑mix) when computing the 60% quality‑pool increment under R.C. 5165.26(E)(1)(a), or must use the facility‑specific change in the rate for direct care costs.
• Whether the case is moot due to expiration of biennial appropriations.
• Whether infirmities in affidavits, unclean‑hands defenses, or fee requests affect relief.

Precedents Cited and Their Influence

• State ex rel. Pressley v. Indus. Comm., 11 Ohio St.2d 141 (1967), and State ex rel. McCarley v. Dept. of Rehab. & Corr., 2024‑Ohio‑2747:
  Set the three‑part mandamus test (clear legal duty; denial of benefit; no adequate remedy). Guided the Court’s finding that ODM had a clear duty to follow R.C. 5165.26(E), the nursing facilities had a right to proper statutory payments, and mandamus was the proper and exclusive remedy.
• Ohio Academy of Nursing Homes v. Ohio Dept. of Job & Family Servs., 2007‑Ohio‑2620:
  Confirmed mandamus as the exclusive avenue for nursing homes challenging Medicaid reimbursement determinations, defeating any argument that relators had an adequate legal remedy elsewhere.
• State ex rel. Canales Flores v. Lucas Cty. Bd. of Elections, 2005‑Ohio‑5642; State ex rel. Brinda v. Lorain Cty. Bd. of Elections, 2007‑Ohio‑5228; Storer Communications, Inc. v. Limbach, 37 Ohio St.3d 193 (1988); State ex rel. Plain Dealer Publ’g Co. v. Cleveland, 2005‑Ohio‑3807:
  Articulated the plain‑meaning, textualist approach: when statutory language is unambiguous, courts apply it as written. These authorities anchored the Court’s refusal to substitute “price” for “rate for direct care costs.”
• State ex rel. Corrigan v. Seminatore, 66 Ohio St.2d 459 (1981); Ondo v. Cleveland, 795 F.3d 597 (6th Cir. 2015):
  Affidavit law: affidavits averring facts on “personal knowledge, or to the best of my knowledge and belief” are not automatically inadmissible; courts can parse and weigh them appropriately. Used to deny ODM’s motion to amend affidavits as unnecessary.
• State ex rel. Morgan v. New Lexington, 2006‑Ohio‑6365; State ex rel. Albright v. Haber, 139 Ohio St. 551 (1942); State ex rel. Miller v. Hamilton Cty. Bd. of Elections, 2021‑Ohio‑831; State ex rel. Columbus Coalition for Responsive Gov’t v. Blevins, 2014‑Ohio‑3745; State ex rel. Coughlin v. Summit Cty. Bd. of Elections, 2013‑Ohio‑3867:
  Outlined the limited and discretionary application of the unclean‑hands doctrine in extraordinary‑writ cases, requiring “reprehensible” conduct—far beyond what was alleged here.
• State ex rel. Shamro v. Delaware Cty. Bd. of Elections, 2025‑Ohio‑941; State ex rel. Williams v. Colasurd, 1995‑Ohio‑236; State ex rel. Cincinnati Action for Housing Now v. Hamilton Cty. Bd. of Elections, 2021‑Ohio‑1038; State ex rel. Dellick v. Sherlock, 2003‑Ohio‑5058:
  Explained waiver of fees/expenses for lack of developed argument and the distinction between “costs” and “attorney fees,” with costs awarded by statute absent bad faith.

Legal Reasoning

1) Textual command of R.C. 5165.26(E)(1)(a)

The statute states that, for each facility, the quality pool includes “sixty percent of the per diem amount by which the nursing facility’s rate for direct care costs…changed as a result of the rebasing.” The Court emphasized three textual points:

• Term choice matters: The General Assembly said “rate for direct care costs,” not “price” (cost per case‑mix unit). Courts may not swap terms based on policy arguments.
• Facility‑specific directive: The statute requires determining the change “for each nursing facility.” Price is uniform at the group level; the rate for direct care costs varies by facility because it incorporates the facility’s case‑mix score. The facility‑by‑facility instruction aligns with the “rate” calculation, not the group “price.”
• Causation phrase (“as a result of rebasing”): Rebasing directly alters the price; the change in a facility’s rate for direct care costs resulting from rebasing equals the price change × that facility’s case‑mix score. The causation clause thus narrows the input to the portion of the rate change attributable to rebasing (i.e., via the price), but does not excise the case‑mix multiplier. ODM’s reading would render “rate for direct care costs” surplusage.

The Court illustrated with a simplified example: If group price rises from $150 to $200 (∆price = $50) and a facility’s case‑mix score is 2.0, then that facility’s rate for direct care costs rises from $300 to $400 (∆rate = $100). Sixty percent of the change is $60—not $30—thereby enlarging the quality pool consistent with the statute.

2) Rejection of policy‑intent override

ODM argued it was “illogical” to include case‑mix in the quality‑pool input and that the General Assembly intended to use price alone. The Court rejected these arguments because the statute’s text is clear, and because pool size (the “pie”) is distinct from allocation among facilities (the “slices”). Including case‑mix only affects the size of the pie; it does not change how slices are awarded, which remains driven by quality scores. High‑quality facilities still receive more slices; a larger pool simply increases the value per slice.

3) Ancillary rulings

• Mootness: The relief sought enforces a continuing statutory formula; expiration of the biennial appropriation does not extinguish that duty. The dispute remains live.
• Affidavits: Statements “to the best of my knowledge and belief” can be parsed; the affidavits were not stricken, and amendment was unnecessary. In any event, the case turns on statutory interpretation more than factual disputes.
• Unclean hands: Participation in budget negotiations and advocacy for statutory compliance are not reprehensible conduct. Defense denied.
• Fees/costs: Attorney fees/expenses denied for lack of developed argument; costs awarded by statute to the prevailing relators.

Impact and Implications

1) Immediate practical effects

• Recalculation and retroactive payments: ODM must recompute the quality‑incentive pool for periods beginning July 1, 2023, using 60% of the facility‑specific change in the rate for direct care costs due to rebasing. This will likely increase pool size materially, raising the per‑point value and payments across facilities according to their quality scores.
• Budget administration: Even with appropriations lapsing, the statutory duty persists—agencies must reconcile past periods and implement the correct formula going forward. Legislative or administrative steps may be needed to manage cash‑flow or appropriation alignment, but agencies may not rewrite formulas to fit perceived fiscal constraints.
• No change to quality ranking mechanics: High‑quality providers still capture more of the pool through higher quality scores. The ruling increases the total funds available for quality without advantaging any facility’s relative share based on case‑mix.

2) Textualism and administrative law

• Strict adherence to statutory formulae: Agencies cannot replace statutory terms with approximations (e.g., “price” for “rate”) based on inferred legislative intent or administrative convenience.
• Separation of powers: Where the General Assembly uses a specific computation, policy arguments about “illogic” cannot supplant clear text. The Court’s insistence on “the words the legislature enacted” sets a robust precedent for fiscal‑formula cases.
• Mootness doctrine in budget litigation: Expiration of appropriations does not moot actions enforcing ongoing statutory commands. This principle will reverberate in future disputes over budget‑linked formulas and carryover calculations.

3) For providers and trade associations

• Mandamus as the pathway: Consistent with Ohio Academy of Nursing Homes, mandamus remains the exclusive vehicle to compel statutory compliance in Medicaid reimbursement calculations.
• Associational standing affirmed in practice: The Court entertained the associations’ mandamus on behalf of members, reinforcing a practical route for industrywide relief where agency computations are systemwide.

4) Legislative drafting and future amendments

• Precision pays: The Court enforced “rate for direct care costs” as a term of art. Drafters should assume courts will honor granular distinctions (rate vs. price; facility‑specific vs. group‑level inputs).
• Stability notwithstanding budget cycles: The Court noted a later amendment (2024 Sub. S.B. 144) did not change the disputed language—lending continuity to this interpretive rule across biennia unless and until the legislature revises the text explicitly.

Complex Concepts Simplified

Key definitions

• Price (cost per case‑mix unit): A group‑level figure reflecting standardized costs, updated during rebasing.
• Case‑mix score: A facility‑specific measure of resident acuity/complexity; recalculated semi‑annually.
• Rate for direct care costs: Facility‑specific per diem = price × case‑mix score.
• Rebasing: Periodic reset of the price to reflect updated cost data (at least every five years).
• Quality‑incentive pool: A statewide fund distributed to facilities based on quality points; the value per point rises when the pool grows or when statewide days/average scores change.

How the 60% rule works

For each facility, find the portion of the increase in its rate for direct care costs that is caused by rebasing. Because rebasing changes the price, the rebasing‑driven change in the facility’s rate equals the price change × that facility’s case‑mix score. The statute requires taking 60% of that amount (per day) and adding it (times the facility’s Medicaid days) into the statewide pool calculation. This is done for each facility, and all are summed, plus the base pool amount.

“Pie and slices” analogy

• Pool size = pie size: Determined by the statutory formula, including the 60% component.
• Allocation = slice count/width: Each facility’s slices depend on its quality points relative to others. The 60% rule increases pie size; it does not change how slices are assigned.

Mandamus

A court order compelling a government official or agency to perform a clear legal duty when there is no adequate alternative remedy. Here, ODM had a clear duty to apply the statutory formula as written.

Mootness

A case is moot when there is no live controversy or effective relief is impossible. The Court held there is a live controversy because the statutory formula persists beyond the biennial appropriation period.

Unclean hands

An equitable defense barring relief if the plaintiff’s conduct is reprehensible in connection with the subject of the suit. The Court found no such conduct; advocacy for statutory compliance is proper.

Practical Compliance Roadmap

• ODM recalculation steps:
  • For each rebasing period at issue (starting July 1, 2023), compute the price change for each group.
  • For each facility, determine its case‑mix score applicable to the rebasing impact calculation, consistent with R.C. 5165.19 and 5165.26, to isolate the rate change “as a result of rebasing.”
  • Calculate facility‑specific ∆(rate for direct care costs) attributable to rebasing = ∆price × facility case‑mix score.
  • Take 60% of that per diem amount, multiply by the facility’s prior‑year Medicaid days, and add to the pool; repeat for all facilities.
  • Recompute value per quality point and redetermine payments under R.C. 5165.26(B).
  • Process retroactive adjustments and prospective corrections; publish methodology and audit trail.
• Facilities’ action items:
  • Verify case‑mix scores and Medicaid day counts used in recalculation.
  • Confirm that the facility’s ∆(rate for direct care costs) reflects the rebasing‑driven change (price change × facility case‑mix).
  • Audit revised payment remittances and quality point valuations; retain documentation for potential reconciliations.
• Legislative/administrative coordination: If appropriation mechanics complicate retroactive payouts, consider targeted legislative adjustments or intra‑agency budgetary mechanisms that preserve fidelity to the statutory formula.

Conclusion and Key Takeaways

• New rule, crisply stated: Under R.C. 5165.26(E)(1)(a), the 60% quality‑pool increment must be computed using the facility‑specific change in the rate for direct care costs attributable to rebasing—not the group price change alone. Practically, that equals the price change × the facility’s case‑mix score.
• Text over intent: The Court reinforced that unambiguous statutory text governs. Agencies may not replace technical terms with near‑equivalents based on policy preferences.
• Mandamus is the vehicle: When ODM’s rate computations deviate from statute, mandamus is the recognized and exclusive remedy to compel compliance.
• Appropriation lapses do not moot statutory duties: The controversy was live because the statutory formula persists beyond a biennium.
• Relief and limits: Writ granted for recalculation and payment from July 1, 2023; fees and expenses denied for lack of argument; costs awarded by statute; affidavits and unclean‑hands challenges rejected.

In the broader legal context, LeadingAge Ohio is a strong reaffirmation of textualism in the administration of complex fiscal statutes. It ensures that quality‑based funding in Ohio’s Medicaid nursing‑home system reflects what the General Assembly actually commanded: a facility‑specific, case‑mix‑sensitive increase to the quality pool tied directly to rebasing. Agencies statewide should heed its message: when the legislature speaks in precise computational terms, courts will insist on exact compliance.