A judge has rejected the LePage administration’s latest attempt to regain federal certification for the Riverview Psychiatric Center in Augusta, ruling that the state missed its opportunity to challenge the termination.

The decision could leave the Maine Department of Health and Human Services on the hook to repay tens of millions of dollars in federal funding for the 92-bed psychiatric hospital.

U.S. District Judge Jon Levy said that although the Maine DHHS was “acting in apparent good faith” by trying to fix problems at Riverview, those corrective attempts don’t excuse the department for missing the deadline to appeal the initial termination decision on June 4, 2013, by the federal Centers for Medicare and Medicaid Services. As a result, Maine DHHS effectively waived its right to appeal the loss of federal certification, Levy wrote.

“Here, the state had ample opportunity to challenge the June 4 decision but failed to do so,” Levy wrote Thursday in a court order upholding an administrative law judge’s decision. “The consequences flowing from that failure may be harsh, but they are not, in the end, surprising given the regulatory scheme set out in the regulations.”

MAKING FIXES INSTEAD OF APPEALING

Those consequences could be costly for the state because it has continued to spend federal money on Riverview in anticipation that the hospital would eventually regain certification. Federal officials indicated last year that Maine could be required to repay that money, estimated to be about $20 million a year.

The office of Maine Attorney General Janet Mills, which argued the DHHS case in federal court, suggested that a further appeal is possible.

“We are reviewing the opinion and will consider the possibility of an appeal to the First Circuit Court of Appeals, upon consultation with the Department of Health and Human Services,” Mills’ spokesman, Tim Feeley, wrote in an email.

But DHHS Commissioner Mary Mayhew sees the ruling as an example of what’s wrong with the federal bureaucracy.

“This decision is extremely disappointing,” Mayhew said in a written statement. “While we are working daily to make sure that mentally ill Mainers have timely access to quality hospital services, the federal government is fixated on a bureaucratic battle with Maine over regulatory technicalities that jeopardize Maine’s safety net hospital for the mentally ill. This kind of ‘regulatory scheme,’ as Judge Levy called it, is the reason people are so frustrated with government. It’s time for the feds to stop letting arcane regulations get between mentally ill Mainers and the resources they need, and start acting as a partner with the LePage administration in maintaining access to these critical hospital services.”

Riverview, located on the grounds of the former Augusta Mental Health Institute in Augusta, provides residential treatment to individuals with severe mental illness and also to dozens of “forensic” patients referred to the hospital from the criminal justice system.

Riverview lost its federal certification in September 2013 after surveys found problems at the facility, including the use of stun guns, pepper spray and handcuffs on patients, improper record-keeping, medication errors and failure to report progress made by patients. The state has since altered policies on patient restraint and seclusion, sought to hire new employees and made other changes.

DHHS filed three separate plans to correct the problems in hopes of regaining the certification, which allowed the state to receive federal payments for patients housed at Riverview. However, the Centers for Medicare and Medicaid Services ultimately declined to reverse its termination decision.

Maine officials appealed that Sept. 27, 2014, decision. But Levy wrote that the state’s argument “stretches the facts of the case” because federal regulations spell out that the state had 60 days from the “initial determination” – in this case, June 4, 2013 – to challenge the loss of certification. The state could have sought a “good cause” extension to that 60-day deadline but never did, Levy said.

Instead, DHHS concentrated on presenting the federal government with plans to address the issues that caused the loss of certification. Levy acknowledged that the state was paying a price for deciding to try to correct the problems rather than appeal the decision.

The federal agency’s June 4, 2013 termination letter “invited the state to engage in a corrective process and the state, acting in apparent good faith, accepted that invitation,” Levy wrote. “It can be argued that the ensuing process penalized the state for having directed its energy and resources toward achieving regulatory compliance, rather than contesting the alleged deficiencies.”

REPAYING FUNDS, FINDING SOLUTIONS

Rep. Drew Gattine, a Westbrook Democrat who co-chairs the Legislature’s Health and Human Services Committee, noted that Mayhew has repeatedly told lawmakers that she was confident

Riverview would be recertified or that the state would prevail in its case before Levy. Now the state again faces the prospect of having to repay up to $20 million a year to the federal government.

Gattine said the Legislature “is very, very interested in doing everything we can to make sure the problems at Riverview are resolved” and has provided emergency funding on five occasions. But he criticized the LePage administration for “finding places to lay blame” instead of working with lawmakers to solve the problems.

“At this point, we need to figure out what is our level of liability to the federal government and how are we going to pay for that?” Gattine said. “But even bigger than that is how are we going to fix the problems at Riverview? It is certainly an important financial issue, but it is also important that we make sure patients are receiving the care that they need.”

In her statement, Mayhew said Riverview has a full license for operation from the state Division of Licensing and Regulatory Services and that “patients are well cared for.”

During the legislative session, Mayhew and other DHHS officials suggested on several occasions that Riverview was unlikely to be recertified until it reduced the number of “forensic” patients in the facility. Such patients are referred from the criminal justice system for a variety of reasons, including being deemed not competent to stand trial or not criminally responsible because of a mental illness. But many of those patients do not require the hospital-level care that the federal funds are paying for at Riverview.

The LePage administration introduced a bill late in the last legislative session to create separate, “secure residential treatment facilities” for forensic patients outside of Riverview. But lawmakers rejected the proposal, which critics viewed as an attempt to outsource the patients to a for-profit company.

“We just didn’t really have time to consider something of that magnitude in such a short period of time,” Gattine said.