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Nikita Petties, et al v. District of Columbia

April 27, 2011

NIKITA PETTIES, ET AL., PLAINTIFFS,
v.
DISTRICT OF COLUMBIA, ET AL., DIAGNOSTIC CONSULTANTS, LLC DEFENDANTS.



The opinion of the court was delivered by: Paul L. Friedman United States District Judge

MEMORANDUM OPINION AND ORDER

This matter is before the Court on the Report and Recommendations of the Special Master filed on February 17, 2011 regarding an invoice dispute between Diagnostic Consultants, LLC ("DiCon") and defendants, the District of Columbia Public Schools ("DCPS") and the Office of the State Superintendent of Education ("OSSE"). See Report and Recommendations of the Special Master in the Matter of Diagnostic Consultants, LLC ("Report and Recommendations") at 1, Feb. 17, 2011. DiCon has filed exceptions to the Special Master's Report and Recommendations, in which it states three objections. See Exceptions to the Report of the Special Master ("Exceptions") at 1, Mar. 9, 2011. Upon consideration of the Report and Recommendations, DiCon's exceptions, and the entire record in this case, the Court will adopt and affirm the Report and Recommendations in its entirety.

I. BACKGROUND

Payments by the defendants to private providers of special education services like DiCon are made pursuant to an Order of this Court issued on August 5, 2009 that details a highly structured payment scheme and delineates resolution procedures for disputes that arise concerning submitted invoices. See generally Order Regarding Payment for Services to Class Members ("Payment Order"), Aug. 5, 2009.*fn1 After a provider submits an invoice, if the defendants dispute any charges, they "shall . . . provide a written dispute notice . . . to the provider no later than twenty (20) calendar days after the invoice was received," containing a detailed description of the basis of the dispute and all supporting documentation. Payment Order ¶ V(a). Then, if a provider disagrees with the amount disputed by the defendants, it shall submit written objections with supporting documentation to DCPS' Office of Special Education or to OSSE "no later than fifteen (15) business days . . . following receipt of a dispute notice." Id.

¶ V(b). "If the defendants continue to dispute all or part of an invoice after receiving a provider's written objection and documentation . . . , within ten (10) business days of receipt of such objection defendants shall issue a written rejection of any claim of the provider and the reasons for the rejection." Id. ¶ V(c). This written rejection serves "as the final administrative decision of the defendants," id. ¶ V(d), and it must include "a notice of the provider's right to request a hearing before the Special Master and the deadline for doing so." Id. ¶ V(e). "Failure by defendants to timely issue a final administrative decision to a provider's written objection will obligate defendants to pay the disputed amount." Id. ¶ V(d).

If a provider is not satisfied with the defendants' final administrative decision, it may then "file a request for proceedings to determine findings of fact and recommendations for resolution with the Office of the Special Master." Payment Order ¶ VI(a).

Such a request must be filed within ten (10) business days of receipt of the final administrative decision of defendants . . . . Failure by the provider to file a timely request for a proceeding before the Special Master will represent the provider's acceptance of the amount paid to date by the defendants as payment in full.

Id. Upon a timely request by a provider, the Special Master shall hold a hearing on the matter, see id. ¶ VI(b), and afterward "shall issue a written report with findings and recommendations for resolving the dispute and shall file such report with the Court . . . ." Id. ¶ VI(c).

The Payment Order then provides that the defendants' and plaintiffs' counsel shall have any opportunity under Rule 53 of the Federal Rules of Civil Procedure to raise with the Court "any objections or defenses [to the Special Master's written report] that are warranted." Payment Order ¶ VI(d). Rule 53(f) provides that "[a] party may file objections to - or a motion to adopt or modify - the master's order, report, or recommendations no later than 21 days" after it is served. FED. R. CIV. P. 53(f)(2). Upon a full review of any such objections, "the Court will decide whether . . . to affirm the Special Master's recommendations or take some other action." Payment Order ¶ VI(d).

In this matter, "[b]etween October 2008 and February 2010, DiCon submitted invoices to either [DCPS] or [OSSE] for various evaluations conducted on students between June 2008 and January 2010." Report and Recommendations at 1. The defendants disputed various invoices, and these disputes were eventually presented to the Special Master for resolution. See id. at 3-14. The Special Master held hearings on March 2, 2010 and March 10, 2010. See id. at 3. She issued her Report and Recommendations on February 17, 2011. See generally id. On April 26, 2011, upon a sua sponte review of her Report and Recommendations, the Special Master issued a brief supplement that corrected a typographical omission in her Report and Recommendations. See Supplemental Report and Recommendation of the Special Master in the Matter of Diagnostic Consultants ("Supplement") at 1-3, Apr. 26, 2011.

The Special Master found that DiCon failed to file a timely request for a hearing with respect to 16 invoices. See Report and Recommendations at 2 n.2 (citing Attachment I(1) to the Report and Recommendations, March 2, 2010 Hearing Transcript at 25-31); Supplement at 1-2.*fn2 The Special Master therefore excluded from her consideration the following invoices: 15P, 15NP, 16NP, 17NP, 18NP, 21NP, 23P, 23NP, 24P, 25P, 25NP, 26P, 27P, 27NP, 28P, and 28NP. See Report and Recommendations at 2 n.2 (citing Attachment I(1) to the Report and Recommendations, March 2, 2010 Hearing Transcript at 25-31); Supplement at 2-3. The Special Master then addressed the merits with respect to the remaining invoices in dispute and found that DiCon failed to support its contention that the rates it billed for special education services are reasonable, prevailing, or market rates. See Report and Recommendations at 13-14, 16-19, 21. In light of this finding, the Special Master concluded that it is now "necessary to determine whether the Chancellor's Rates - and those paid by DCPS and OSSE - can be sustained as reasonable . . . ." Id. at 21.

II. DISCUSSION

On March 9, 2011, DiCon filed exceptions to the Report and Recommendations. In full, DiCon states:

(1) At the hearing, DCPS invoked a directive dated July 18 2008 as a defense to the claim it had failed to provide any policy in support of its claim DiCon's rates were not reasonable, and that in fact the rates paid by DCPS were reasonable. On February 25, 20121 [sic], DCPS admitted to the Special Master that the July 18 2008 Directive was not valid. Therefore, DCPS should, pursuant ...


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