| Matter of Senior Care Servs., Inc. v New York State Dept. ofHealth |
| 2007 NY Slip Op 09637 [46 AD3d 962] |
| December 6, 2007 |
| Appellate Division, Third Department |
| In the Matter of Senior Care Services, Inc., Appellant, v New YorkState Department of Health et al., Respondents. |
—[*1] Andrew M. Cuomo, Attorney General, Albany (Victor Paladino of counsel), forrespondents.
Mugglin, J. Appeal from a judgment of the Supreme Court (Stein, J.), entered August 28,2006 in Albany County, which, among other things, dismissed petitioner's application, in acombined proceeding pursuant to CPLR article 78 and action for declaratory judgment, to reviewa determination of respondent Department of Health denying petitioner's application to be anenrolled Medicaid provider.
Petitioner is a provider of incontinence products whose principal place of business is inColorado. In January 2004, petitioner's application to become a provider of durable medicalequipment (hereinafter DME) for the New York State Medicaid program was denied by theOffice of Medicaid Management's Bureau of Enrollment (hereinafter OMM) of respondentDepartment of Health because there were no "unmet needs for mail order durable medicalsupplies" that petitioner sought to provide to Medicaid recipients. Petitioner thereafter requestedthe reconsideration of the decision and explained that, inasmuch as its survey of health careagencies located in New York indicated that there was an unmet need for its products andservices, OMM's denial of its application was arbitrary and capricious. Petitioner also insistedthat the denial of its application was in violation of the Commerce Clause of the US Constitutionand a provision of the federal Medicaid statute (see 42 USC § 1396a [a] [23]).OMM's Division of [*2]Medicaid Fraud Control and ProgramIntegrity informed petitioner that the denial of petitioner's enrollment application had beenaffirmed.
Petitioner commenced the instant hybrid CPLR article 78 proceeding and declaratoryjudgment action against the Department and respondent Commissioner of Health seeking, amongother things, the annulment of OMM's denial of its application. Following joinder of issue andthe completion of discovery, petitioner moved in February 2006 for leave to amend the petitionto allege that the Department's policy constituted an unadopted rule in violation of the StateAdministrative Procedure Act and NY Constitution, article IV, § 8, and for summaryjudgment in its favor. Supreme Court denied petitioner's motion to amend and for summaryjudgment and dismissed the petition in its entirety. Petitioner now appeals, raising the sameissues.
First, Supreme Court denied petitioner's motion to amend the pleadings because the motionwas both untimely and lacking in merit. A motion to amend may be granted where thenonmovant would suffer no prejudice and the amendment is not plainly lacking in merit(see CPLR 3025 [b]; Smith vHaggerty, 16 AD3d 967, 967-968 [2005]). However, " '[l]ateness in making a motion toamend, coupled with the absence of a satisfactory excuse for the delay and prejudice to theopposing party, justifies denial of such a motion' " (Sadler v Town of Hurley, 304 AD2d930, 931 [2003], quoting Thibeault v Palma, 266 AD2d 616, 617 [1999]). Whether togrant or deny leave to amend a pleading lies solely within the discretion of the trial court and itsdetermination will not be disturbed on appeal absent a clear abuse of discretion (see Harris v Jim's Proclean Serv., Inc.,34 AD3d 1009, 1010 [2006]; Albany-Plattsburgh United Corp. v Bell, 307 AD2d416, 420 [2003], lv denied 1 NY3d 620 [2004]). Here, we find no abuse of discretion, butaffirm primarily because the proposed amendment is without merit. Petitioner's core argument isthat OMM's internal policy against admitting DME providers who supply their goods via mailorder delivery and do not have a storefront presence in New York is a rule which has not beenproperly promulgated in violation of NY Constitution, article IV, § 8 and StateAdministrative Procedure Act article 2.
It is now settled that " 'only a fixed, general principle to be applied by an administrativeagency without regard to other facts and circumstances relevant to the regulatory scheme of thestatute it administers constitutes a rule or regulation' " that must be filed with the Secretary ofState under the NY Constitution and State Administrative Procedure Act (Matter of NewYork City Tr. Auth. v New York State Dept. of Labor, 88 NY2d 225, 229 [1996], quotingMatter of Roman Catholic Diocese of Albany v New York State Dept. of Health, 66NY2d 948, 951 [1985]). Here, the evidence submitted by respondents is that, commencing inJanuary 1998, they adopted a general policy—but not an absolute ban—against mailorder delivery of DME due to a variety of problems, including theft of such devices in both urbanand rural areas, difficulty in verifying delivery and consequent increased cost of the Medicaidprogram. This evidence demonstrates that the "no home delivery" policy was not "a rigid. . . policy invariably applied across-the-board . . . without regard toindividualized circumstances or mitigating factors" that would come within the reach of the StateAdministrative Procedure Act (Matter of Schwartfigure v Hartnett, 83 NY2d 296, 301[1994]). Thus, the proposed amendment is without merit.
Next, petitioner claims that OMM's denial of its application was premised upon theunsubstantiated contention that there were "no unmet needs" that required petitioner's servicesand, therefore, it was arbitrary and capricious. Moreover, petitioner contends that it was deniedan effective appeal of OMM's denial of its application inasmuch as OMM neglected to articulatethe true reason for such denial.[*3]
Our inquiry is limited to whether the denial of petitioner'sapplication was arbitrary, capricious or affected by error of law (see Matter of Metacarpa vJohnson, 268 AD2d 938, 939 [2000]). The determination of an administrative agency needonly have a rational basis (see Matter of County of Monroe v Kaladjian, 83 NY2d 185,189 [1994]; Matter of University Hgts. Nursing Home v Chassin, 245 AD2d 776, 778[1997]). Here, based on the existence of over 4,000 facilities in the state which supplyincontinence products, the total lack of consumer complaints of an inability to obtain suchproducts and in light of the broad regulatory discretion that OMM has to assess the Medicaidprogram's needs for certain medical products and services and to limit the enrollment ofproviders accordingly, it cannot be said that the denial of petitioner's application was arbitraryand capricious (see e.g. Matter of Ex-L Ambulette v Commissioner of N.Y. State Dept. ofSocial Servs., 268 AD2d 431, 432 [2000], lv denied 95 NY2d 753 [2000]; seealso Matter of Melone v New York State Dept. of Social Servs., 233 AD2d 548, 548 [1996]).Also, the record reveals that petitioner was not denied an appropriate appeal. Where an applicantseeks reconsideration of a denial of an enrollment application, the applicant bears the burden ofpresenting "documentation or arguments which would controvert the reason for the denial ordisclose that the denial was based upon a mistake of fact" (18 NYCRR 504.5 [e] [2]). Accordingdue deference to OMM's interpretation of the relevant regulations and their application topetitioner's application, no basis exists to reverse its decision declining the same (see Matterof University Hgts. Nursing Home v Chassin, 245 AD2d at 777).
Finally, petitioner claims that the denial of its application violates the "free choice ofprovider" provision of the federal Social Security Act and the Commerce Clause of the USConstitution. Since the "free choice of provider" provisions bestow legal rights upon Medicaidrecipients, petitioner lacks standing to assert this claim (see 42 USC §1396a [a] [23]; Matter of Hebel vWest, 25 AD3d 172, 175 [2005], lv denied 7 NY3d 706 [2006]). Petitioner'sreliance on the Commerce Clause of the US Constitution is equally unavailing. Respondents'general policies against mail order delivery and requiring a storefront presence have a sound,rational basis, are applied indiscriminately to both in-state and out-of-state DME suppliers, withonly an incidental effect on interstate commerce, and do not discriminate against interstatecommerce (see Oregon Waste Systems, Inc. v Department of Environmental Quality ofOre., 511 US 93, 99 [1994]; City of New York v State of New York, 94 NY2d 577,596 [2000]).
Cardona, P.J., Rose, Lahtinen and Kane, JJ., concur. Ordered that the judgment is affirmed,without costs.