| Matter of Sbriglio v Novello |
| 2007 NY Slip Op 07967 [44 AD3d 1212] |
| October 25, 2007 |
| Appellate Division, Third Department |
| In the Matter of Martin Sbriglio et al., Appellants, v Antonia C.Novello, as Commissioner of Health, Respondent. |
—[*1] Andrew M. Cuomo, Attorney General, Albany (Victor Paladino of counsel), forrespondent.
Mercure, J.P. Appeal from a judgment of the Supreme Court (Lynch, J.), entered June 14,2006 in Albany County, which dismissed petitioners' application, in a proceeding pursuant toCPLR article 78, to review a determination of respondent denying petitioners' request for arefund of a certain application fee.
In 1993, the Public Health Council (hereinafter PHC) contingently approved petitioners'application for the establishment of a residential health care facility in the City of Newburgh,Orange County. Shortly thereafter, a representative of respondent contingently approvedpetitioners' application setting forth the scope and concept for construction of the facility.Petitioners then paid respondent a capital value fee (see Public Health Law § 2802[7]) of $74,101.05 in satisfaction of one of the listed contingencies and, after obtaining approvalto increase the proposed cost of their project, paid an additional fee of $3,524.26.
Subsequently, petitioners sought to amend their application by, among other things, changingthe location of the nursing home site, increasing the capacity of the adult day-care program andincreasing the cost of the project again. In 2000, respondent indicated that the original applicationwas deemed to be amended and superceded, issued a new application [*2]number, and announced a temporary moratorium on the review ofapplications that had not yet received approval to start construction. In October 2004, after themoratorium was lifted, the PHC disapproved petitioners' amended application.
Following disapproval of their application, petitioners elected not to request a public hearing(see Public Health Law § 2801-a [2]) and instead sought a refund of the fee paid torespondent in connection with the original application. Respondent refused to return the fee,asserting that petitioners' original application had been approved. Petitioners then commencedthis CPLR article 78 proceeding challenging respondent's refusal to refund the fee. SupremeCourt dismissed the petition, concluding that respondent's interpretation of Public Health Law§ 2802 (7) as requiring payment of the fee upon contingent approval of the originalapplication was rational. Petitioners appeal and we now reverse.
Approval of the "establishment or incorporation" of a nursing home is governed by PublicHealth Law § 2801-a and is within the purview of the PHC, while approval of the"construction" of a nursing home is governed by Public Health Law § 2802 and is withinrespondent's authority.[FN1] During the relevant time period, applicants were required to pay an initial $1,000 application feeand, "[a]t such time as [respondent's] written approval [was] granted," an additional feeof 0.4% of the total capital value of the application (Public Health Law former § 2802 [7][emphasis added]). The regulations implementing section 2802 contemplate three distinct"approvals" by respondent within the construction application process: first, the applicant mustobtain approval of the "scope and concept of the project," which may be made subject tocontingencies (10 NYCRR 710.2 [entitled "Application; project scope and concept"]); second,after satisfaction of the contingencies and the applicant's provision of additional informationrequired by 10 NYCRR 710.4 and 710.5, respondent determines whether to approve theapplication (see 10 NYCRR 710.6 [entitled "Determination by the commissioner"]); and,finally, the applicant must obtain approval to start construction of the project (see 10NYCRR 710.7 [a] [entitled "Approval to start construction"]). The question before us is which ofthe three separate approvals triggered payment of the 0.4% capital value fee. Respondentmaintains that the initial scope and concept approval under 10 NYCRR 710.2—the onlytype of approval obtained by petitioners in connection with their original application—is"written approval" sufficient to trigger payment of the capital value fee under Public Health Law§ 2802 (7), even if the application is ultimately disapproved. We disagree.
In our view, the words "written approval" in Public Health Law § 2802 (7) are notused in any "technical" sense "such that [respondent] has a greater competence in interpreting thestatute than the courts" (Matter of Judd v Constantine, 153 AD2d 270, 272-273 [1990]).Thus, the question presented here "is one of pure statutory reading and analysis, dependent onlyon accurate apprehension of legislative intent, [and] there is little basis to rely on any specialcompetence or expertise of the administrative agency" (Kurcsics v Merchants Mut. Ins.Co., 49 NY2d 451, 459 [1980]; seeMatter of Angello v Labor Ready, Inc., 7 NY3d 579, 583 [2006]). With that in mind, wenote that it is well established that contingent approval from either respondent or the PHC is "nottantamount to final approval of [a] certificate of need application. The agencies have the 'powerto re-evaluate an initial determination of public need for [*3]establishment of a hospital where [the] initial determination ha[s]not received final approval' " (Sheffield Towers Rehabilitation & Health Care Ctr. vNovello, 293 AD2d 182, 186 [2002], quoting Matter of Hamptons Hosp. & Med. Ctr. vMoore, 52 NY2d 88, 91 [1981]; see Matter of Jay Alexander Manor v Novello, 285AD2d 951, 952-953 [2001], lv denied 97 NY2d 610 [2002]). Indeed, it has long beenrecognized that "[t]he tentative nature of [such] administrative determination[s] clearly render[s][them] subject to reconsideration by the agency" (Matter of Hamptons Hosp. & Med. Ctr. vMoore, 52 NY2d at 93).[FN2]
In accord with that recognition, respondent's regulations provide that it is at the second stageof the construction application process—that reflected in 10 NYCRR 710.6—thatresults in the critical "Determination by the commissioner." As explained in an affidavit from theformer director of respondent's Office of Health Systems Management, a contingent scope andconcept approval of the application merely "authorizes the applicant to proceed with further stepsin the construction approval process." It is not until "receiving and reviewing the documentationrequired by 10 NYCRR 710.4[,] the documentation and recommendations related to anyamendments to the application under 10 NYCRR 710.5[,] and after all applicable outstandingcontingencies have been satisfied" that respondent "determines whether to approve anapplication" pursuant to 10 NYCRR 710.6 (a).
Although, as respondent contends, the statute expressly provides that the fees are to becharged "to recover departmental costs in performing" the functions involved in the constructionapproval process (Public Health Law § 2802 [7]) and respondent's services are requiredprior to giving scope and concept approval, the capital value fee nonetheless applies only toapproved projects. Contrary to respondent's argument, it is not merely the outlay ofservices that triggers the fee; as petitioners assert, an application disapproved at the scope andconcept stage—requiring the same output of services—indisputably does not requirepayment of the fee. Rather, Public Health Law § 2802 (7) provides that the fee is due whenrespondent's "written approval is granted" and, as described above, respondent's determination ofwhether to approve an application for construction is made pursuant to 10 NYCRR 710.6.Accordingly, in the absence of language in Public Health Law § 2802 (7) suggesting that"written approval" means "contingent or tentative approval," as opposed to a determination byrespondent regarding whether to grant approval, we reject respondent's assertion that the scopeand concept approval given under 10 NYCRR 710.2 (e) (1) triggers the fee as contrary to theclear wording of the statutory provision (see generally Matter of Angello v Labor Ready,Inc., 7 NY3d at 583).[FN3][*4]Inasmuch as petitioners received only contingent approvalunder 10 NYCRR 710.2 (e) (1), respondent's refusal to refund their capital value fee wasarbitrary, capricious and contrary to law.
Petitioners' remaining arguments have been considered and found to be lacking in merit.
Peters, Spain, Carpinello and Mugglin, JJ., concur. Ordered that the judgment is reversed, onthe law, without costs, petition granted, and respondent is directed to refund the $77,625.31capital value fee to petitioners.
Footnote 1: The application process iscommonly referred to as the Certificate of Need or CON review process.
Footnote 2: The tentative nature of the scopeand concept approval is further illustrated by the fact that final approval was made contingent toand dependent upon payment of the capital value fee itself. Had petitioners not paid the fee, theycould not have obtained final written approval.
Footnote 3: We are unpersuaded bypetitioners' argument that the capital value fee requirement is not triggered until respondentgrants permission to start construction under 10 NYCRR 710.7. The statute requires thefee upon "written approval" of an "application for construction" (Public Health Law §2802 [7]), not upon approval to start construction. Again, the determination whether to approvean application is made pursuant to 10 NYCRR 710.6 and it is at that point that the fee istriggered.