We granted a petition for a writ of certiorari to the Court of Appeals in this appeal from a superior court’s review of the decision of an administrative agency because we were concerned about the standard of review employed by the Court of Appeals and the deference it afforded the Georgia Department of Community Health’s interpretation of its manual. See Dept. of Community Health v. Pruitt Corp. , 284 Ga. App. 888 645 SE2d 13 2007. At the heart of the case is a dispute over the interpretation of the Department of Community Health’s Medicaid reimbursement formula for nursing facilities. The Department of Community Health “DCH” reimburses nursing facilities that participate in the state Medicaid program according to a per diem rate specific to each facility. In order to be reimbursed, the nursing facility must enter into an agreement with DCH, which agreement incorporates by reference DCH’s manual on nursing facility policies and procedures. The manual contains the reimbursement formula which is based on the facility’s annual cost report. Where, as here, a facility changes ownership with less than six months remaining in the fiscal year July 1-June 30,1 the new owner files an initial cost report covering its period of ownership in the fiscal year and, according to the DCH nursing facility manual, the new owner’s reimbursement rate is “based on the previous owner’s last approved cost report inflated to current costs, as determined by DCH, or the costs from the new owner’s initial cost report, whichever is lower.”
Neither the manual nor the agreement into which it is incorporated defines “last approved cost report,” and the meaning of that phrase is the crux of this case. Several interpretations have been employed at various stages of this litigation.2 The Court of Appeals granted DCH’s application for discretionary review of the superior court’s decision reversing the administrative decision in favor of DCH, and issued an opinion that resulted in our grant of Pruitt Corporation’s petition for a writ of certiorari.
