NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; [email protected]
25-P-1194 Appeals Court
EXECUTIVE OFFICE OF HEALTH AND HUMAN SERVICES vs.
LINDA MANOR EXTENDED CARE.
No. 25-P-1194.
Suffolk. May 5, 2026. - September 29, 2026.
Present: Singh, Brennan, & Allen, JJ.1
Division of Administrative Law Appeals. Medicaid.
Administrative Law, Agency's interpretation of regulation,
Rate setting, Rate regulation. Regulation. Jurisdiction,
Administrative matter. Practice, Civil, Review of
administrative action, Failure to prosecute, Judgment on
the pleadings.
Civil action commenced in the Superior Court Department on July 2, 2024.
The case was heard by Jackie Cowin, J., on motions for judgment on the pleadings.
Jason B. Curtin for the defendant.
Michael A. Capuano, Special Assistant Attorney General, for the plaintiff.
1 Justice Brennan participated in the deliberation on this case prior to his retirement.
2
SINGH, J. Linda Manor Extended Care (Linda Manor) appeals
from a judgment of the Superior Court vacating a decision of the
Division of Administrative Law Appeals (DALA). A DALA
magistrate concluded that the Executive Office of Health and
Human Services (EOHHS) erroneously disallowed over $134,000 in
costs claimed for medical services based on EOHHS's
interpretation of 114.2 Code Mass. Regs. § 6.06(2)(b) (1998), a
record-keeping regulation. A judge of the Superior Court
vacated DALA's decision, not on the merits, but because of Linda
Manor's failure to prosecute the claim for more than two
decades.
This appeal presents the question whether DALA had
jurisdiction to decide a rate setting appeal that turns on
EOHHS's interpretation of its own regulation, or whether such
interpretation may be challenged only through an action for
declaratory judgment under G. L. c. 30A, § 7, and G. L. c. 231A.
If DALA had jurisdiction, we also must determine whether Linda
Manor's failure to prosecute its complaint for over twenty years
required dismissal.
We hold that DALA had jurisdiction to hear Linda Manor's
administrative appeal and that it was within DALA's discretion
to decline to dismiss the appeal. Accordingly, we reverse the
judgment of the Superior Court and affirm DALA's decision.
3
Background. 1. Regulatory scheme. Medicaid is "a
cooperative Federal and State program that provides medical
assistance to low income persons based on financial need"
(quotation and citation omitted). Fournier v. Secretary of the
Executive Office of Health & Human Servs., 488 Mass. 43, 45
(2021). EOHHS is the State agency responsible for administering
MassHealth, "the State program by which the Commonwealth
participates in Medicaid." Executive Office of Health & Human
Servs. v. Mondor, 491 Mass. 1015, 1016 n.5 (2023), cert. denied,
144 S. Ct. 2657 (2024).
EOHHS is required to establish, by regulation, "fair and
adequate" rates to be paid by governmental units, to meet the
costs of facilities like Linda Manor for the care of Medicaid
patients.2 G. L. c. 118E, § 13C. While the methods for
calculating such rates continue to change over time, "[EOHHS]
performs this duty by annually promulgating, after public
hearing, a general and comprehensive regulation which sets forth
the rate setting formula. It then calculates a rate of payment
for each individual provider by applying the formula to the
2 In 2012, the Legislature transferred this rate setting authority from the former Division of Health Care Finance and Policy to EOHHS. See G. L. c. 118E, § 13C. In Linda Manor's administrative appeal in this matter, DALA substituted EOHHS for the original agency respondent. We refer to EOHHS throughout because nothing in this appeal turns on the change in statutory scheme or the substitution of EOHHS.
4
provider's reported cost information." Perkins Sch. for the
Blind v. Rate Setting Comm'n, 383 Mass. 825, 828 (1981).
In establishing annual rates, EOHHS relies in part on
detailed cost reports filed by facilities at regular intervals.
Under the regulations in effect at the relevant time, facilities
like Linda Manor were required to keep "accurate, detailed and
original financial records to substantiate reported costs for a
period of at least five years." 114.2 Code Mass. Regs.
§ 6.06(2)(b).
2. Rate determination for Linda Manor. Linda Manor is a
skilled nursing facility that provides in-home nursing and
rehabilitation services to Medicaid patients. EOHHS used Linda
Manor's 1998 cost report (cost report) to calculate the
facility's rates of payment for the years 2000, 2001, and the
first half of 2002. The cost report included, inter alia, Linda
Manor's direct restorative therapy (DRT) and indirect
restorative therapy (IRT) costs.3
3 DRT services are defined as those "[s]ervices of physical therapists, occupational therapists, and speech, hearing and language therapists provided directly to individual Residents to reduce physical or mental disability and to restore the Resident to maximum functional level." 114.2 Code Mass. Regs. § 6.02 (1998). IRT services are those provided for "orientation programs for aides and assistants, in-service training to staff, and consultation and planning for continuing care after discharge." Id.
5
Linda Manor filed a notice of claim of appeal challenging
the rates that EOHHS had set for 2000. While the appeal was
pending, in 2003, EOHHS contracted with an independent
accounting firm to audit the cost report. In response, Linda
Manor provided documentation to support its DRT costs, including
logs of therapy sessions conducted by the facility's contracted
therapists, with information about patients and the type and
duration of sessions. Linda Manor did not maintain detailed
logs of its contract therapists' IRT services but instead
submitted documents concerning the nature of those IRT services,
invoices from its contract vendor, and records reflecting total
expenditures for all therapy services. Linda Manor asserted
that its IRT costs could be calculated based on that
documentation by subtracting the DRT costs from the total.
EOHHS's contract auditors ultimately recommended a disallowance
of Linda Manor's IRT costs on the basis that they "[n]eed[ed]
indirect logs" to substantiate those costs.
Following what EOHHS maintains was a "universally
applicable" interpretation of its record-keeping regulations at
the time, EOHHS adopted the auditors' recommendation and
disallowed one hundred percent of Linda Manor's IRT costs.
EOHHS then revised Linda Manor's rates for the years 2000
through the first half of 2002, and reduced Linda Manor's total
payments by $134,260.
6
3. DALA appeal. a. Proceedings. As previously
mentioned, in April 2000, Linda Manor contested the rates for
the years governed by the cost report, through a timely appeal
to DALA.4 On July 26, 2005, Linda Manor filed with DALA a motion
to amend its bill of complaint to challenge EOHHS's subsequent
disallowance of its IRT costs on the basis that it had "properly
and sufficiently maintained records to support its claim for
[those] charges." The appeal then sat idle for seventeen years.5
In February and March 2022, an administrative magistrate at
DALA contacted Linda Manor to discuss pending appeals. Linda
Manor stated its intent to proceed on certain appeals and to
file withdrawals in others. On September 19, 2023, DALA issued
an interim order, inquiring into the status of various appeals
and ordering the parties to file legal memoranda in the current
4 Linda Manor filed two additional appeals concerning payment rates for the years governed by its cost report. These appeals were later consolidated by DALA and were assigned the same docket number as the April 2000 complaint.
5 As discussed in more detail, infra, the Superior Court judge's memorandum and order on cross motions for judgment on the pleadings refers to a July 27, 2016 DALA order that was never made part of the administrative record. The judge erroneously concluded that Linda Manor had failed to file a status report in response to that 2016 order.
From our review of the record, there is no evidence DALA ordered Linda Manor to take any affirmative action between Linda Manor's filing of its appeal in 2000 and the issuance of that portion of DALA's 2023 order requiring the parties to file prehearing memoranda.
7
matter. The parties filed their initial memoranda in October
2023.
As part of its initial memorandum, EOHHS moved for an order
to show cause why Linda Manor's appeal should not be dismissed
for lack of prosecution (show cause motion). That motion was
denied without prejudice. The DALA magistrate granted one
continuance and issued a series of orders aimed at moving the
proceedings forward. The magistrate also admonished Linda Manor
because it "did not comply with [the] requirement" that it
timely identify its hearing representative.
On April 5, 2024, the parties agreed to have the appeal
decided on the papers. In addition to their respective briefs,
EOHHS submitted an affidavit from its then director of
institutional programs for the office of long term services and
supports,6 and Linda Manor submitted an affidavit from its former
representative.7 As part of its May 10, 2024 primary brief,
6 The former director conceded that "[n]either direct therapy logs nor indirect therapy logs are specified in the document retention regulation then in effect," but attested that EOHHS had been "consistent throughout the years" in requiring certain documentation to substantiate IRT costs.
7 The representative, a certified public accountant, had provided reimbursement consulting to Linda Manor during and after the audit. He attested that during audits for earlier base years, the outside firm EOHHS had retained to audit Linda Manor's report "became fixated on how indirect therapy was reimbursed." He asserted that the auditors had "believe[ed] that nursing facilities were receiving duplicate payments for the same indirect therapy costs." Based on his experience as an
8
EOHHS renewed its show cause motion, and further claimed that
DALA lacked jurisdiction to hear the appeal.
b. Decision. On June 5, 2024, DALA issued its decision.
The magistrate found that (1) DALA had jurisdiction to hear a
challenge to EOHHS's interpretation of 114.2 Code Mass. Regs.
§ 6.06(2)(b); (2) EOHHS's interpretation of that regulation and
application to Linda Manor in this case was arbitrary or
capricious;8 (3) Linda Manor's course of conduct did not warrant
dismissal for failure to prosecute; and (4) EOHHS had not shown
that it was prejudiced by the long delay in the appeal's
progress. Notably, DALA found that the "backing out" method
used by Linda Manor for calculating IRT costs, meaning provision
of supporting documentation and subtracting DRT costs from the
total costs, "was a familiar approach in the industry" at the
auditor and observations of the outside firm over a period of time, he formed the opinion that "this firm was laser focused on making a disallowance for indirect therapy and did not employ auditor's [judgment] which allows for auditors to use alternate documentation to support cost." He claimed that the firm instead "chose to propose disallowances of the entire cost category."
8 Specifically, DALA found that EOHHS's interpretive views were not entitled to deference where "the regulation is plain and unambiguous," and that "it should be interpreted according to its terms." DeCosmo v. Blue Tarp Redev., LLC, 487 Mass. 690, 699 (2021). "To defer to an agency's interpretation when the regulation itself is unambiguous would be to permit the agency, under the guise of interpreting a regulation, to create de facto a new regulation" (quotation and citation omitted). Jose v. Wells Fargo Bank, N.A., 89 Mass. App. Ct. 772, 776 (2016).
9
time. Accordingly, DALA found that the disallowance in costs
should be reversed and ordered that the matter be remanded to
EOHHS for a final determination of damages.
4. Judicial review. EOHHS timely sought judicial review
in the Superior Court pursuant to G. L. c. 30A, § 14. In its
complaint, EOHHS claimed that DALA's decision on the merits, and
its decision not to dismiss the appeal for lack of jurisdiction
or failure to prosecute, were based on errors of law, were
arbitrary or capricious, and were in excess of DALA's statutory
authority. EOHHS also claimed that DALA failed to adhere to its
obligation to "provide speedy and fair disposition of all
appeals," G. L. c. 7, § 4H, given Linda Manor's failure to
pursue its appeal for over two decades.
Following briefing and a hearing on cross motions for
judgment on the pleadings, the Superior Court judge issued her
order on May 1, 2025, allowing EOHHS's motion and denying Linda
Manor's cross motion. Although the judge agreed with DALA's
determination that it had jurisdiction to hear the appeal and
with its decision on the merits in favor of Linda Manor, the
judge agreed with EOHHS that DALA's denial of EOHHS's motion to
dismiss the appeal for failure to prosecute was arbitrary and
capricious.9
9 While the crux of the judge's decision rested on her view that Linda Manor had allowed its appeal to stagnate over the
10
Judgment on the pleadings entered on the docket on May 12,
2025, vacating DALA's decision and affirming EOHHS's
disallowance of IRT costs. Linda Manor filed a timely notice of
appeal.
Discussion. "We review de novo the allowance of a motion
for judgment on the pleadings." Perullo v. Advisory Comm. on
Personnel Standards, 476 Mass. 829, 834 (2017). "In reviewing
an agency decision, we [also] exercise de novo review on
questions of law, 'giving substantial deference to a reasonable
interpretation of a statute by the administrative agency charged
with its . . . enforcement.'" Craft Beer Guild, LLC v.
Alcoholic Beverages Control Comm'n, 481 Mass. 506, 512 (2019),
quoting Commerce Ins. Co. v. Commissioner of Ins., 447 Mass.
478, 481 (2006).
We otherwise review an agency decision to determine whether
it is "[b]ased upon an error of law; . . . [u]nsupported by
substantial evidence; or . . . [a]rbitrary or capricious, an
abuse of discretion, or otherwise not in accordance with law."
Freiner v. Secretary of the Executive Office of Health & Human
course of more than two decades, she also determined that Linda Manor had failed to respond to a 2016 status report order from DALA in this matter. However, this appears to have been a misreading of the administrative record, and EOHHS, in its brief, conceded as much.
11
Servs., 494 Mass. 198, 204 (2024), quoting G. L. c. 30A,
§ 14 (7).
1. DALA's jurisdiction. On appeal, EOHHS challenges
DALA's conclusion that DALA had jurisdiction to hear Linda
Manor's appeal and argues that Linda Manor could properly
challenge EOHHS's record-keeping regulation only through an
action for declaratory relief under G. L. c. 30A, § 7, and G. L.
c. 231A. Because Linda Manor's appeal challenges only EOHHS's
interpretation, rather than the validity of the regulation
itself, we disagree.
Our case law recognizes that DALA has the authority to
"hear challenges to specific rate calculations, but [that] it
may not entertain substantive attacks on the rate regulations
themselves." Salisbury Nursing & Rehabilitation Ctr., Inc. v.
Division of Admin. Law Appeals, 448 Mass. 365, 375 (2007)
(Salisbury). See G. L. c. 118E, § 13E. "A substantive
challenge is [one] mounted 'on the ground that the general
regulation is substantively defective, that is, inadequate.'"
Beth Israel Hosp. Ass'n v. Rate Setting Comm'n, 24 Mass. App.
Ct. 495, 501 (1987) (Beth Israel), quoting Massachusetts State
Pharm. Ass'n v. Rate Setting Comm'n, 387 Mass. 122, 126 (1982).
Linda Manor's challenge to EOHHS's interpretation of its recordkeeping regulation does not clearly present either a challenge
12
to its particular rate calculation, or a substantive challenge
to the validity of the rate regulations themselves.
In determining whether DALA has authority to hear a rate
setting appeal, courts generally apply a "jurisdictional test."
Salisbury, 448 Mass. at 375. This test aims to parse whether a
provider's rate setting appeal presents a challenge to a
regulation's "particular" or "general" application, Rate Setting
Comm'n v. Baystate Med. Ctr., 422 Mass. 744, 748 (1996)
(Baystate), by asking two questions: (1) "were there special
circumstances making application of the rate to a particular
provider different from its application to all others?" and (2)
"were those circumstances the result of something other than
voluntary business decisions?" Salisbury, supra. See Baystate,
supra; Rate Setting Comm'n v. Faulkner Hosp., 411 Mass. 701, 705
(1992); Rate Setting Comm'n v. Division of Hearings Officers,
401 Mass. 542, 547 (1988) (Hearings Officers); Medi-Cab of Mass.
Bay, Inc. v. Rate Setting Comm'n, 401 Mass. 357, 363 n.9 (1987)
(Medi-Cab). Courts then determine whether there are "special
circumstances" by "examining how application of the regulation
to that facility 'compares to other [facilities] of the same
sort,'" Salisbury, supra, quoting Baystate, supra at 749, and by
looking for factors "beyond the provider's control, which affect
the provider but not the class as a whole," Hearings Officers,
supra at 545.
13
The courts have not explicitly addressed DALA's authority
to hear interpretive challenges like Linda Manor's, presumably,
in part, because earlier cases applying the two-part test have
either presented clear substantive challenges to class-based
rate setting regulations, raised challenges that were based on a
provider's unique circumstances, or involved the parties
stipulating to DALA's authority to set an individual rate. See
Salisbury, 448 Mass. at 365-368, 376 (during agency's transition
from prospective to standard rate setting methodology, provider
nursing home challenged legality of base year set for it by
regulation in "thinly disguised, frontal attack" on "total
payment adjustment" regulations); Baystate, 422 Mass. at 744-752
(circumstances of provider "as it evolved from a community
hospital to a tertiary-care facility" -- including increases in
"admission of older, sicker patients," "number of open-heart
surgeries," "number of dialysis inpatients," "survival rates of
low birth weight patients," "number and complexity of ultrasound
and CT [computed tomography] examinations," and "number of highrisk obstetrical and gynecological patients" -- qualified as
"unique circumstances" not resulting from "voluntary business
decision"); Hearings Officers, 401 Mass. at 542-547 (error for
DALA to exercise jurisdiction and hear appeal by provider of
homemaker and home health aide services on basis that DALA had
authority to "go beyond" regulation and order EOHHS's
14
predecessor to "ignore" regulation in setting provider's rates);
Medi-Cab, 401 Mass. at 361-365 (parties stipulated to authority
of DALA's predecessor to hear challenge by provider of
nonemergency ambulance service to individual rate set under
class-based regulation governing reimbursement for wheelchairaccessible transport services). In at least one case, however,
this court did not question DALA's jurisdiction to hear a
provider's challenge to the interpretation, by EOHHS's
predecessor, of an ambiguous regulation used to compute a
provider's "average equity capital." Bottomley v. Division of
Admin. Law Appeals, 22 Mass. App. Ct. 652, 653 (1986). See id.
at 653-657 (provider nursing home properly challenged EOHHS
predecessor's interpretation of term "average annual capital
investment").
Here, EOHHS argues that DALA lacked jurisdiction because
Linda Manor's appeal challenges a record-keeping requirement of
"general application" (citation omitted). Salisbury, 448 Mass.
at 374. The issue on the merits before DALA was whether EOHHS
had properly interpreted its regulation, 114.2 Code Mass. Regs.
§ 6.06(2)(b), to require that IRT costs be substantiated by a
specific type of document, i.e., IRT logbooks. EOHHS asserts
that this interpretation was universally applied during the
relevant period, and Linda Manor does not contest that claim.
Thus, EOHHS argues, because Linda Manor has failed to
15
"demonstrate circumstances . . . which make application of the
rate to [Linda Manor] different from its application to all
other providers in the class," DALA lacked jurisdiction to hear
this appeal. Id. at 375, quoting Hearings Officers, 401 Mass.
at 545.
Linda Manor does not dispute that it cannot satisfy either
prong of the jurisdictional test. Salisbury, 448 Mass. at 375.
Instead, it argues, and DALA determined, that because this
appeal does not present a "substantive attack[]" on the validity
of a rate setting regulation but rather a challenge to EOHHS's
interpretation of that regulation, DALA is not required to apply
the two-prong test. Id. at 374-376. EOHHS contends that in
drawing this distinction, DALA applied an incorrect standard to
determine whether DALA had jurisdiction, by misconstruing the
Supreme Judicial Court's holding in Salisbury -- that "DALA may
properly hear challenges to specific rate calculations, but it
may not entertain substantive attacks on the rate regulations
themselves," id. at 375 -- "as a grant of authority to DALA to
entertain everything but attacks on rate regulations
themselves." Or as the DALA magistrate put it, quoting id.,
"EOHHS theorizes that disagreements with its industry-wide
interpretations of rate-setting regulations are among the
'attacks on the rate regulations themselves' that DALA is not
authorized to entertain." We do not read DALA's grant of
16
authority to be so limited. We agree with DALA that the
jurisdictional test first articulated in Medi-Cab, 401 Mass. at
363 n.9, applies to appeals that present a challenge to "the
rate regulations themselves," Salisbury, supra, but does not
extend to EOHHS's interpretations of those regulations.
To better appreciate the basis for this distinction, we
follow the DALA magistrate in revisiting the concerns that gave
rise to the "special circumstances" jurisdictional test.
Salisbury, 448 Mass. at 375. As a general matter, "[d]uly
promulgated regulations of an administrative agency are
presumptively valid and 'must be accorded all the deference due
to a statute.'" Robinhood Fin. LLC v. Secretary of the
Commonwealth, 492 Mass. 696, 707 (2023), quoting Craft Beer
Guild, LLC, 481 Mass. at 520. That presumption of validity
applies equally in the context of EOHHS's rate setting
authority. DALA cannot simply invalidate EOHHS's "regulation[s]
of general applicability." Beth Israel, 24 Mass. App. Ct. at
502. DALA's review of the rates EOHHS sets for individual
facilities is complicated by its statutory remit, which requires
DALA to review not only whether an aggrieved provider's rates
are lawful, but also whether those rates are "adequate, fair and
reasonable for such provider." G. L. c. 118E, § 13E. As the
DALA magistrate recognized, however, "[i]f facilities were
permitted to challenge the adequacy, fairness, and
17
reasonableness of their rates on the basis of considerations
shared by many other facilities, the practical result could be a
backdoor invalidation of the pertinent EOHHS regulations."
The threat of "backdoor invalidation" of EOHHS's
regulations of general application presents an analytical
challenge, viz., when a provider challenges a rate setting
regulation, how do the courts and DALA draw the line between an
appeal that challenges "the substantive validity . . . of [that]
regulation" -- a challenge which should "proceed by way of an
action for declaratory judgment" -- and an appeal that is
limited to "the peculiar application of that regulation to the
provider"? Beth Israel, 24 Mass. App. Ct. at 503. This court
recognized in Beth Israel that "the line cannot be between
'facial' challenges and 'as applied' challenges, because every
provider can phrase a challenge to a general regulation as an
appeal from the particular rate set for it under that
regulation." Medi-Cab, 401 Mass. at 363 n.9, quoting Beth
Israel, supra. See Salisbury, 448 Mass. at 375 ("Substantive
attacks include challenges like Salisbury's which, although
phrased as an appeal from an individual rate determination, are
in fact a challenge to substantive regulations"). The Supreme
Judicial Court, in Medi-Cab, supra, posited that for challenges
to rate setting regulations based on class, "the line, in
theory, is clear." The court held that "when a provider
18
challenges a class-based rate . . . the provider properly may
appeal that rate to [DALA] only if the provider can demonstrate"
both prongs of the jurisdictional test (emphasis added). Id.
In this way, the courts have effectively limited any claim
challenging the substance of a duly promulgated EOHHS regulation
to arguments of "special circumstances." Salisbury, supra. See
G. L. c. 118E, § 13E; Baystate, 422 Mass. at 749; Hearings
Officers, 401 Mass. at 544.
Linda Manor's disagreement with EOHHS's interpretation of
its record-keeping regulation is not the same as a "challenge[]
[to] a class-based rate," and does not implicate the same
concerns that the courts sought to address in developing a
jurisdictional test to steer toward the appropriate forum
providers whose appeals may unwittingly threaten to invalidate
those duly promulgated regulations. Hearings Officers, 401
Mass. at 545. See G. L. c. 30A, § 7; G. L. c. 118E, § 13E;
G. L. c. 231A. Appeals that are limited in this way, like Linda
Manor's, do not target the validity of the regulation at issue
but rather assume its validity while advancing a competing
interpretation.10 From a policy perspective, just as "every
10It is important to recall that the context here concerns the scope of DALA's statutory grant of authority to hear challenges to another agency's determinations. G. L. c. 118E, § 13E. See Cliff House Nursing Home, Inc. v. Rate Setting Comm'n, 378 Mass. 189, 196 (1979) (recognizing DALA predecessor's role in determination of rates for providers,
19
provider can phrase a challenge to a general regulation as an
appeal from the particular rate set for it under that
regulation," Medi-Cab, 401 Mass. at 363 n.9, requiring an
interpretive challenge to first pass the specificity prong would
needlessly circumscribe DALA's jurisdictional authority.
In holding that Linda Manor's interpretive challenge falls
within the scope of DALA's authority to hear EOHHS rate setting
appeals under G. L. c. 118E, § 13E, we also caution that this
finding is relatively narrow. Providers whose rate setting
appeals to DALA also present facts, issues, or arguments that
more clearly fall within the framework of Medi-Cab and its
progeny -- in addition to presenting a limited dispute
concerning EOHHS's regulatory interpretations, either at the
outset of the appeal or in the course of administrative
proceedings -- would still need to meet the two-prong
jurisdictional test. See, e.g., Beth Israel, 24 Mass. App. Ct.
at 504 (while characterizing its complaint as challenge to
including "independent function of conducting adjudicatory proceedings" and "the authority to make rulings of law and not merely recommendations"). DALA and the courts must still defer to EOHHS's reasonable interpretations of its regulations. See Freiner, 494 Mass. at 205, quoting Massachusetts Fine Wine & Spirits, LLC v. Alcoholic Beverages Control Comm'n, 482 Mass. 683, 687 (2019) ("'[W]e are generous in our deference to administrative agencies in their interpretation of their own regulations,' ensuring only that their interpretation is reasonable").
20
fairness of particular rate, provider hospital "vigorously
attacked the substantive validity of regulations of general
application" during proceedings, in attempt to persuade DALA to
incorporate certain factors into methodology of rate setting
calculations). Moreover, appeals to DALA disputing EOHHS's
interpretations of its own regulations still face the same
"heavy burden" that is faced by all parties challenging an
agency's reasonable determination. Hartnett v. Contributory
Retirement Appeal Bd., 494 Mass. 612, 616 (2024), quoting Police
Dep't of Boston v. Kavaleski, 463 Mass. 680, 689 (2012). See
Carey v. Commissioner of Correction, 479 Mass. 367, 369-370
(2018), quoting Manor v. Superintendent, Mass. Correctional
Inst., Cedar Junction, 416 Mass. 820, 820 (1994) ("Unless an
agency's interpretation of its own regulation is 'arbitrary,
unreasonable, or inconsistent with the plain terms of the rule,'
such interpretation is entitled to deference").
2. Failure to prosecute. Linda Manor argues that the
judge erred in vacating DALA's order on the basis that the
denial of EOHHS's motion to dismiss was arbitrary or capricious.
Because DALA appropriately exercised its discretion to hear the
appeal, we agree.
Courts "review an agency's decision to determine whether it
was," inter alia, "arbitrary or capricious." Ten Local Citizen
Group v. New England Wind, LLC, 457 Mass. 222, 228 (2010). See
21
G. L. c. 30A, § 14 (7). Under that "highly deferential"
standard, the court is not permitted to substitute its own
judgment but must instead accord "due weight to the . . .
discretionary authority conferred upon [the agency]." Friends &
Fishers of the Edgartown Great Pond, Inc. v. Department of
Envtl. Protection, 446 Mass. 830, 836 (2006), quoting Hotchkiss
v. State Racing Comm'n, 45 Mass. App. Ct. 684, 695-696 (2006).
"A decision is not arbitrary or capricious unless there is no
ground which 'reasonable [persons] might deem proper' to support
it." Freiner, 494 Mass. at 215, quoting McCauley v.
Superintendent, Mass. Correctional Inst., Norfolk, 491 Mass.
571, 598 (2023).
In arguing that the judge rightly vacated Linda Manor's
appeal, EOHHS points primarily to cases addressing whether and
when involuntary dismissal is appropriate in civil proceedings.
See, e.g., Bucchiere v. New England Tel. & Tel. Co., 396 Mass.
639, 640, 642 (1986) (affirming dismissal of Superior Court case
for lack of prosecution where plaintiff had not "initiated any
prosecutorial activity whatsoever" after more than six years);
State Realty Co. of Boston v. MacNeil Bros. Co., 358 Mass. 374,
378, 379 (1970) (State Realty) (affirming Superior Court's
refusal to review case after parties' "inaction of over eleven
years" following rescript). In that context, the courts have
recognized that "[i]nvoluntary dismissal is a drastic sanction
22
which should be utilized only in extreme situations." Dewing v.
J.B. Driscoll Ins. Agency, 30 Mass. App. Ct. 467, 471 (1991),
quoting Monahan v. Washburn, 400 Mass. 126, 128 (1987). In
considering whether to impose that sanction, "[t]he allowance or
denial of a motion to dismiss for failure to prosecute is
committed to the judge's sound discretion." Bucchiere, supra at
641. Indeed,
"[t]he authority of a court to dismiss sua sponte for lack
of prosecution has generally been considered an 'inherent
power,' governed not by rule or statute but by the control
necessarily vested in courts to manage their own affairs so
as to achieve the orderly and expeditious disposition of
cases."
State Realty, supra at 379, quoting Link v. Wabash R.R. Co., 370
U.S. 626, 630-631 (1962). While agencies lack the same inherent
authority as the courts, they do enjoy comparable discretion in
managing their dockets, under their statutory authority and the
regulations governing the agency's proceedings.
Under its enabling statute, DALA is responsible for the
"speedy and fair disposition of all appeals." G. L. c. 7, § 4H.
In carrying out that responsibility, DALA applies in its
proceedings the standard rules of practice and procedure,
801 Code Mass. Regs. §§ 1.00. In pertinent part, 801 Code Mass.
Regs. § 1.01(7)(g)(2) (2020), which governs motions to dismiss,
states the following:
"When the record discloses the failure of a Party . . . to
respond to notices or correspondence, to comply with orders
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of the Presiding Officer, or otherwise indicates an
intention not to continue the prosecution of a claim, the
Presiding Officer may initiate or a Party may move for an
order requiring the Party to show cause why the claim shall
not be dismissed for lack of prosecution. If a Party fails
to respond to such order within ten days, or a Party's
response fails to establish such cause, the Presiding
Officer may dismiss the claim with or without prejudice."
(Emphases added.)
EOHHS argues that Linda Manor's inaction over the life of its
appeal "indicate[d] an intention not to continue with the
prosecution of [its] claim." 801 Code Mass. Regs.
§ 1.01(7)(g)(2).
In light of 801 Code Mass. Regs. § 1.01(7)(g)(2), the DALA
magistrate found it "difficult to view Linda Manor's course of
conduct as a punishable failure to prosecute where the facility
complied with each applicable regulation and order." Indeed,
when EOHHS filed its initial show cause motion, it did not cite
any regulatory violation as a basis for dismissing the appeal,
and it did not claim that Linda Manor had run afoul of any
agency order. We agree with the DALA magistrate that nothing in
DALA's regulations would have "indicated to a reasonable party
that it would forfeit its timely claims by failing to implore
DALA and EOHHS for progress . . . ." Contrast Suburban Home
Health Care, Inc. v. Executive Office of Health & Human Servs.,
Office of Medicaid, 488 Mass. 347, 360-361 (2021) (imposing sixyear statute of limitations on EOHHS overpayment recovery
proceedings, dismissing overpayment proceeding filed after more
24
than ten years, and noting "absurd consequences of not including
any statute of limitations whatsoever for administrative
proceedings"); Weiner v. Board of Registration of Psychologists,
416 Mass. 675, 680-683 (1993) (reversing board decision to
suspend petitioner, rendered sixteen years after complaint was
filed, where board "created an administrative morass" through
excessive delay and repeated issuance of orders to show cause
and dismissals). We have previously noted Linda Manor's
subsequent failure to comply with the DALA magistrate's order
timely to name a new representative. Under the plain language
of the governing regulation, however, nothing compelled the
magistrate to issue an order to show cause why the appeal should
not be dismissed. 801 Code Mass. Regs. § 1.01(7)(g)(2) ("the
Presiding Officer may initiate . . . an order requiring the
Party to show cause"). See Zafar v. State Lottery Comm'n, 497
Mass. 536, 542 (2026), quoting Perez v. Department of State
Police, 491 Mass. 474, 483 (2023) (courts consistently interpret
"'may' as 'generally permissive, reflecting . . . grant [of]
discretion or permission'"). Accordingly, we defer to the DALA
magistrate's decision not to issue an order to show cause and to
move forward with Linda Manor's appeal.11
11Under G. L. c. 7, § 4H, DALA is required to "prepare annually a report concerning all appeals filed with [DALA] during the preceding calendar year," including information concerning "the number of appeals currently pending" and "the
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EOHHS lastly claims that DALA failed to give due weight to
the prejudice EOHHS faced in defending Linda Manor's appeal.
This argument is unavailing. The substantive issue before DALA
involved the straightforward interpretation of an unambiguous
regulation. EOHHS had not shown an attempt to collect the
testimony of former employees. Indeed, EOHHS itself did not
take any action in this case or file a show cause motion for
twenty-three years. Because we cannot say that DALA's decision
to exercise its jurisdiction in these circumstances or to
reinstate Linda Manor's disallowed IRT costs "lack[ed] any
rational explanation that reasonable persons might support," it
was error to vacate DALA's decision. Cambridge v. Civil Serv.
Comm'n, 43 Mass. App. Ct. 300, 303 (1997).
Conclusion. The judgment of the Superior Court entered May
12, 2025, is reversed. A new judgment shall enter affirming
DALA's decision and order. Consistent with that order, the
matter is remanded to EOHHS for a final determination of
damages.
So ordered.
length of time from receipt of the appeal by [DALA] until a written recommended final decision, summary decision, or other interlocutory ruling is issued."