| Matter of Lutheran Med. Ctr. v Daines |
| 2009 NY Slip Op 06139 [65 AD3d 551] |
| August 4, 2009 |
| Appellate Division, Second Department |
| In the Matter of Lutheran Medical Center,Appellant, v Richard F. Daines et al., Respondents. |
—[*1] Andrew M. Cuomo, Attorney General, New York, N.Y. (Michael S. Belohlavek and StevenWu of counsel), for respondents.
In a proceeding pursuant to CPLR article 78, inter alia, to review a determination of therespondents dated October 25, 2006, retroactively adjusting the petitioner's Medicaidreimbursement rate from 1999 through 2003 and directing the recoupment of overpayments, thepetitioner appeals from so much of an order and judgment (one paper) of the Supreme Court,Kings County (Jacobson, J.), dated April 28, 2008, as granted that branch of the respondents'motion which was for leave to renew their opposition to the petition, which had been granted in ajudgment of the same court dated September 20, 2007, and, upon renewal, denied the petitionand dismissed the proceeding.
Ordered that the order and judgment dated April 28, 2008, is affirmed insofar as appealedfrom, with costs.
In 1997 the petitioner, Lutheran Medical Center, opened an inpatient psychiatric unit.Generally, the per diem, per patient, reimbursement rate that such units receive for treatingMedicaid patients is determined by the New York State Department of Health (hereinafter theDOH) on a prospective basis based on a formula derived from the costs actually incurred by theunit in a prior year (see generally Public Health Law § 2807-c; 10 NYCRRsubpart 86-1). The prior year is referred to as the "base year" and the year in which the unitrenders service is referred to as the "rate year." The regulations of the DOH provide that thecost-based rate for "exempt units," such as the [*2]petitioner'sunit, is subject to a "Group Average Ceiling," and the cost-based rate for such units shall be nogreater than 110% of the weighted average cost per day, per patient, of similar units in thehospital's region (see 10 NYCRR 86-1.61 [c]).
From 1998 to 2001, because the petitioner's psychiatric unit lacked "adequate costexperience," the petitioner received reimbursements based upon a budgeted rate subject toreadjustment based upon actual costs (see 10 NYCRR 86-1.19). In February 2002, therespondents approved the petitioner's request to switch from a budgeted rate to a cost-based rateusing 1998 as the base year, and the respondents issued the petitioner's rates for the 2002 rateyear, which included the prospective per diem rate for the 2002 rate year plus retroactiveadjustments. In February 2004, however, the respondents notified the petitioner that due to a"technical error," the respondents had failed to apply the group average ceiling with respect to itsreimbursement rates for any rate years after 1998. After the respondents retroactively adjustedthe petitioner's rates from 1999 through 2003 and recouped overpayments made to the petitionerbased on their failure to apply the group average ceiling to any rate years after 1998, thepetitioner filed an administrative appeal arguing that the respondents' actions were untimely inviolation of DOH regulations. In a letter to the petitioner dated October 25, 2006, therespondents indicated that they had determined that the petitioner's administrative appeal raisedan issue of law and not one of fact, and denied the petitioner's request for an administrativehearing.
The petitioner then commenced this proceeding pursuant to CPLR article 78 contending thatthe respondents' actions in making the retroactive adjustments and recouping the overpaymentswere arbitrary, capricious, and contrary to law. Although most of the petitioner's allegationsdealt with the alleged untimeliness of the respondents' actions, the petitioner also generallyalleged that the respondents had no authority to recoup the overpayments. In opposition to thepetition, the respondents contended that their authority to recoup the overpayments was derivedfrom their common-law right to recoup public funds distributed erroneously as a result ofcomputational or data entry errors (see Matter of Schwartfigure v Hartnett, 83 NY2d296, 300 [1994]; Matter of Westledge Nursing Home v Axelrod, 68 NY2d 862, 864-865[1986]). The Supreme Court originally granted the petition, accepting the contention made in thepetitioner's reply papers that the respondents' error was one of judgment and not one ofcomputation or data entry, rendering the common-law right of recoupment unavailable (seeMatter of Daleview Nursing Home v Axelrod, 62 NY2d 30, 34 [1984]; Matter of Jarrett v Novello, 27 AD3d973, 974 [2006]; Matter of Faxton Sunset-St. Luke's Skilled Nursing Facility v Dowling,233 AD2d 865, 865-866; Hurlbut v Whalen, 58 AD2d 311, 318 [1977]).
The respondents then moved, inter alia, for leave to renew their opposition to the petition.Along with their motion, the respondents submitted affidavits from the DOH employees whoaverred that the error in question resulted from a staff analyst inputting the group average ceilingin the wrong location, causing the computer program used by the respondents to only apply thegroup average ceiling to the first rate year, which was 1998. The analyst affirmed that she didnot purposely fail to apply the group average ceiling to the rate years following 1998. Rather, shebelieved that the computer would apply the group average ceiling to all years, but due to hermistake in entering the data into the wrong location, the program only applied the group averageceiling to the first year.
Contrary to the petitioner's contention, the Supreme Court providently exercised itsdiscretion in granting leave to renew. The respondents offered a reasonable justification for theirfailure to submit additional facts at the time of their opposition to the petition (see CPLR2221 [e]). [*3]As the petitioner did not specifically contend in itspetition that the respondents' mistake was an error in judgment rather than an error incomputation or data entry, it was not unreasonable for the respondents to fail to realize, at thetime of their opposition to the petition, that this would be a disputed issue. Since the respondentsestablished, upon renewal, that the overpayments were made based on a "mistake of fact" andnot a "mistake of judgment," the Supreme Court, upon renewal, properly concluded that therespondents had authority to retroactively adjust the petitioner's Medicaid reimbursement rateand recoup the overpayments (seeMatter of New York Foundling Hosp., Inc. v Novello, 47 AD3d 1004, 1005 [2008];Highbridge-Woodycrest Ctr. v Novello, 304 AD2d 363, 363-364 [2003]). Accordingly,the Supreme Court, upon renewal, properly denied the petition and dismissed the proceeding.
The petitioner's remaining contentions are without merit. Mastro, J.P., Dickerson, Eng andHall, JJ., concur.