| Matter of New Franklin Ctr. for Rehabilitation & Nursing vNovello |
| 2009 NY Slip Op 06072 [64 AD3d 1132] |
| July 30, 2009 |
| Appellate Division, Third Department |
| In the Matter of New Franklin Center for Rehabilitation & Nursing,Appellant, v Antonia C. Novello, as Commissioner of Health, et al., Respondents. (ProceedingNo. 1.) In the Matter of Bayview Nursing and Rehabilitation Center, LLC, et al.,Appellants, v Richard F. Daines, as Commissioner of Health, et al., Respondents.(Proceeding No. 2.) |
—[*1] Andrew M. Cuomo, Attorney General, Albany (Victor Paladino of counsel), forrespondents.
[*2]Mercure, J.P. Appeals from a judgment of the SupremeCourt (Connolly, J.), entered July 5, 2008 in Albany County, which dismissed petitioners'applications, in two proceedings pursuant to CPLR article 78, to review six determinations ofrespondent Commissioner of Health revising petitioners' Medicaid reimbursement rates.
Petitioners in these two CPLR article 78 proceedings are six private residential health carefacilities that receive Medicaid reimbursement. They challenge determinations of respondentCommissioner of Health finding them ineligible to receive adjustments to their Medicaidreimbursement rates under Public Health Law § 2808 (18) for the purpose of recruitmentand retention of nonsupervisory health care workers.
After undergoing changes in ownership in 2002 and 2003, petitioners entered into a businessarrangement with Budget Services, Inc., pursuant to which they leased all nursing personnelworking in their facilities. The purpose of this relationship was to lower the facilities' premiumsfor workers' compensation, health and unemployment insurance. Petitioners submitted new baseperiod cost reports that reflected this leasing arrangement with Budget, characterizing theirnursing personnel expenses as "fees" and "purchased and contracted services," rather than directsalary or wage expenses. As a result, between September 2004 and February 2006, theCommissioner advised each petitioner that all health recruitment and retention award money waseliminated from their reimbursement rates. Petitioners thereafter pursued administrative appealsand, in June 2005, petitioner New Franklin Center for Rehabilitation & Nursing commenced thefirst of these proceedings challenging the Commissioner's "irrational reimbursementmethodology," and seeking to set aside the Commissioner's determination as arbitrary andcapricious. In April 2007, the remaining petitioners (hereinafter the Bayview petitioners)commenced proceeding No. 2 asserting an identical challenge.
Following joinder of issue and an objection by respondents that the Bayview petitioners'application was untimely, Supreme Court dismissed proceeding No. 2 as barred by the applicablestatute of limitations. In addition, the court dismissed proceeding No. 1 upon finding that theCommissioner's determination to deny recruitment and retention reimbursement was entirelyconsistent with the express language of the statute. Petitioners appeal, and we now affirm.
Initially, we reject the Bayview petitioners' assertion that Supreme Court improperlydismissed their petition as barred by the applicable statute of limitations. Inasmuch as petitioners'challenge implicates the methodology employed to calculate their entitlement to healthrecruitment and reimbursement funds—as opposed to computational errors—thesetwo proceedings were required to be commenced within four months after the 120-day periodfollowing receipt of their initial rate computation sheets (see 10 NYCRR 86-2.13 [a];Matter of Pinegrove Manor II, LLC v Daines, 60 AD3d 767, 768 [2009]; Matter ofSt. Margaret's Ctr. v Novello, 23 AD3d 817, 818 [2005]; Matter of Evergreen Val.Nursing Home v DeBuono, 277 AD2d 569, 570 [2000]). Furthermore, "[t]he inclusion of animproper issue," such as a challenge to methodology, "in an administrative appeal does notrevive an expired statute of limitations" (Matter of Pinegrove Manor II, LLC v Daines,60 AD3d at 768; see Matter of Sylcox v Chassin, 227 AD2d 834, 836 [1996];Concourse Nursing Home v Perales, 219 AD2d 451, 453-454 [1995], lv denied87 NY2d 812 [1996], cert denied 519 US 863 [1996]). Contrary to the Bayviewpetitioners' argument, the Commissioner's actions in assigning the administrative appeals acontrol number, failing to issue standard rejection letters and engaging in discussion on [*3]the issue did not inject uncertainty regarding the finality of theCommissioner's determinations such that estoppel or tolling of the statute of limitations isappropriate here (see Beth Israel Med. Ctr. v Department of Health of State of N.Y., 18AD3d 367, 367-368 [2005], lv denied 6 NY3d 704 [2006]; see generally Matter ofNew York State Med. Transporters Assn. v Perales, 77 NY2d 126, 130 [1990]). Rather,between September 2004 and February 2006, the Bayview petitioners received theCommissioner's determinations advising them both of the elimination of funding and thatchallenges to "Medicaid rate methodology cannot be appealed administratively." Therefore,proceeding No. 2, which was commenced in April 2007, was untimely.
Turning to the merits, which are before us in the timely commenced proceeding No. 1, wenote that the Commissioner "is entitled to a 'high degree of judicial deference, especially when. . . act[ing] in the area of [her] particular expertise,' and thus petitioner[ ] bear[s]the 'heavy burden of showing' that [the agency's] rate-setting methodology 'is unreasonable andunsupported by any evidence' " (Matter of Nazareth Home of the Franciscan Sisters vNovello, 7 NY3d 538, 544 [2006], quoting Matter of Consolation Nursing Home vCommissioner of N.Y. State Dept. of Health, 85 NY2d 326, 331-332 [1995]; see Matterof Society of N.Y. Hosp. v Axelrod, 70 NY2d 467, 473 [1987]). The purpose of theprovision at issue here, Public Health Law § 2808 (18), is to "increase health care accessand improve quality by providing funding for . . . nursing homes . . .to improve their ability to recruit and retain qualified workers" (Senate Mem in Support of L2002, ch 1, 2002 McKinney's Session Laws of NY, at 1635). That funding is to be provided"pursuant to a methodology as specified in the statute" (id. at 1636) and, indeed, section2808 (18) provides a specific formula for calculating recruitment and retention adjustments.Specifically, the adjustments are based upon a facility's "total gross salary and fringe benefitcosts" as reported "on exhibit H of [its] . . . cost report" (Public Health Law §2808 [18] [a] [ii]; [c] [i]).
Here, New Franklin Center, like the Bayview petitioners, leased its health care workers fromBudget and, as a result, reported no gross salary or fringe benefit costs for those workers onexhibit H of its cost report. Hence, the Commissioner determined, in conformity with the expresslanguage of the statute, that New Franklin Center was not eligible for recruitment and retentionfunds. As explained by the Commissioner, the funds provided by the statute are to be used solelyfor the purpose of recruiting and retaining nonsupervisory health care workers, and theCommissioner is authorized to audit facilities to ensure compliance with this requirement(see Public Health Law § 2808 [18] [d]). An interpretation of the statute aspermitting the use of an unrelated company to provide these services would frustrate theCommissioner's ability to ensure that the funds are used for their intended purposes. Therefore,while new Franklin Center may be correct that the statute is remedial in nature, "[t]he issue hereis [solely] . . . whether those who provide certain services to Medicaid recipientsshould be permitted to circumvent legislative measures that help to insure against fraud on thepublic" (Matter of New York State Med. Transporters Assn. v Perales, 77 NY2d at 132).Thus, given the express statutory language and according the Commissioner's interpretation thedeference that is due, we cannot say that the Commissioner acted irrationally or arbitrarily andcapriciously in setting New Franklin Center's Medicaid reimbursement rate (see Matter ofNazareth Home of the Franciscan Sisters v Novello, 7 NY3d at 544-545; Matter of St.Margaret's Ctr. v Novello, 23 AD3d at 819).
We have considered New Franklin Center's remaining claims and conclude that they arelacking in merit.
Peters, Malone Jr., Stein and Garry, JJ., concur. Ordered that the judgment is affirmed,without costs.