| Matter of Community Related Servs., Inc. vCarpenter-Palumbo |
| 2011 NY Slip Op 03693 [84 AD3d 1450] |
| May 5, 2011 |
| Appellate Division, Third Department |
| In the Matter of Community Related Services, Inc., Petitioner, vKaren M. Carpenter-Palumbo, as Commissioner of Alcohol and Substance Abuse Services, et al.,Respondents. |
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Egan Jr., J. Proceeding pursuant to CPLR article 78 (transferred to this Court by order of theSupreme Court, entered in Albany County) to review a determination of respondentCommissioner of Alcoholism and Substance Abuse Services which, among other things, revokedpetitioner's operating certificate.
Petitioner was certified in 1998 by respondent Office of Alcoholism and Substance AbuseServices (hereinafter OASAS) as an alcohol and substance abuse counseling treatment facility toprovide substance abuse treatment services. As a facility certified by OASAS, petitioner wassubject to regular inspections and recertification reviews to ensure its compliance with theprovisions of 14 NYCRR (Department of Mental Hygiene). In late 2005 or early 2006, petitionercame to the attention of OASAS's Bureau of Enforcement because its Medicaid billing patterns,reserve for uncollectible Medicaid billings, length of patient stay and number of patient visits peryear, among other factors, were allegedly significantly different than that of similar facilities. Asa result, OASAS began an investigation of petitioner to determine whether the facility was [*2]operating in compliance with applicable laws, rules and regulations.At the conclusion of its investigation, OASAS found petitioner to be in violation of, among otherthings, 45 sections of 14 NYCRR (Department of Mental Hygiene). In September 2006, OASASadvised petitioner of its findings as well as its intention to revoke petitioner's operating certificateand impose fines for such violations. Petitioner responded through counsel and, thereafter, in lateOctober 2006, OASAS's investigators revisited petitioner's facility. Upon finding noimprovements to petitioner's practices, in November 2006, OASAS revoked petitioner'soperating certificate and imposed fines in excess of $16 million. Petitioner thereafter requested ahearing pursuant to Mental Hygiene Law § 32.21 to challenge OASAS's determination.
After a multi-day administrative hearing conducted between April and July 2008 to reviewthe decision and order of OASAS, the Hearing Officer issued a report and recommendations thatfound petitioner in violation of 33 sections of 14 NYCRR (Department of Mental Hygiene) andrecommended revocation of its operating certificate and the imposition of fines for thoseviolations occurring after December 2003, the date of petitioner's last recertification inspection.In December 2006, respondent Commissioner of Alcoholism and Substance Abuse Servicesadopted the report and recommendations of the Hearing Officer, revoked petitioner's operatingcertificate and imposed fines in the amount of $492,800. Petitioner thereafter commenced theinstant proceeding pursuant to CPLR article 78, which was then transferred to this Court by orderof Supreme Court (see CPLR 7804 [g]).[FN*]
Petitioner first argues that it should have been afforded an opportunity to implement acorrective action plan (hereinafter CAP) to cure any deficiencies found before its operatingcertificate was revoked. With regard to chemical dependence treatment facilities such aspetitioner, the Mental Hygiene Law provides the Commissioner with the power "to conductinvestigations into the operations of providers of services . . . and to makeinspections and examine records . . . to determine whether such providers ofservices are complying with the provisions of this chapter and applicable laws, rules, andregulations" (Mental Hygiene Law § 32.13). Furthermore, pursuant to Mental HygieneLaw § 32.21 (a), all that is required to be provided to the certificate holder before anydetermination is made is notice and an opportunity to be heard. Upon a determination that theholder has failed to comply with the terms of its operating certificate or with the provisions ofany applicable statute, rule or regulation (see Mental Hygiene Law § 32.21 [a]), theCommissioner has the power to "revoke, suspend, or limit an operating certificate" (MentalHygiene Law § 32.21 [a]), and to "impose a fine of up to [$1,000]" (Mental Hygiene Law§ 32.21 [b]). In this matter, OASAS conducted an investigation of petitioner pursuant toMental Hygiene Law § 32.13. Nothing in that statute provides that a facility under such aninvestigation, such as petitioner, be permitted to implement a CAP, and the failure of theLegislature to include it within the statute is an indication that its exclusion was intended (seePajak v Pajak, 56 NY2d 394, 397 [1982]; Matter of Collins v Dukes Plumbing & Sewer Serv., Inc., 75 AD3d697, 699 [2010], lv granted 15 NY3d 713 [2010]). While the Commissioner haspromulgated 14 NYCRR 810.14, which, with respect to certain biannual "Inspection andReviews," provides that "[t]he on-site review process shall include appropriate [*3]reporting and corrective action follow-up subsequent to the review"(14 NYCRR 810.14 [f]), those regulations are not applicable to this proceeding because theinvestigation conducted by OASAS of petitioner was not an inspection or review as defined by14 NYCRR 810.14 (see 14 NYCRR 810.14 [a], [b] [1]-[5]). Accordingly, and in notingthat the Commissioner's interpretation of statutes and regulations that she is charged withadministering is entitled to deference if it is not irrational or unreasonable (see Matter of Posada v New York StateDept. of Health, 75 AD3d 880, 882 [2010], lv denied 15 NY3d 712 [2010]; Matter of Rubenfeld v New York StateEthics Commn., 43 AD3d 1195, 1199 [2007]; Matter of Neighborhood CleanersAssn.-Intl. v New York State Dept. of Envtl. Conservation, 299 AD2d 790, 792 [2002]), wediscern no error in the Commissioner's determination that the provisions of 14 NYCRR 810.14pertaining to CAPs do not apply to investigations such as the one conducted in this case. We arealso unpersuaded by petitioner's argument that either 14 NYCRR 810.15, 1010.8 or 1010.9requires that petitioner have an opportunity to implement a CAP after an investigation conductedpursuant to Mental Hygiene Law § 32.13. 14 NYCRR 810.15 specifically provides that,other than for deficiencies found as a result of an inspection made pursuant to 14 NYCRR 810.14(b), upon written notice an operating certificate may be revoked "at any time" (14 NYCRR810.15 [a]) based on the provider's "fail[ure] to operate in compliance with any applicable law,rule or regulation" (14 NYCRR 810.15 [a] [7]).
Next, we reject petitioner's assertion that it was penalized for failing to correct anydeficiencies when OASAS's investigators returned to the facility in late October 2006. While theHearing Officer indeed noted that petitioner had taken no steps to modify its practices afterreceiving notice of its deficiencies, a review of the entirety of the Hearing Officer's report andrecommendations confirms that his findings and conclusions are based on petitioner's violationof regulations, rather than on any failure to correct those violations after receiving notice thereof.We also find no merit to petitioner's argument that the Hearing Officer's determinationimproperly relied on hearsay documents, including work sheets prepared during the course of theinvestigation by OASAS's investigators—two of whom testified at the hearing (see Matter of Sookhu v Commissioner ofHealth of State N.Y., 31 AD3d 1012, 1014 [2006]; Matter of Tsakonas vDowling, 227 AD2d 729, 730 [1996], lv denied 88 NY2d 812 [1996]; Matter ofAnderson v Bane, 199 AD2d 708, 710 [1993]; Matter of Blake v Mann, 145 AD2d699, 701 [1988], affd 75 NY2d 742 [1989]). We are likewise unpersuaded by petitioner'sargument that the Hearing Officer improperly relied on 14 NYCRR 822.11 (k)—aregulation that provides standards designed to limit excessive outpatient services and that wasnot in effect until after petitioner's certificate was already revoked (see 14 NYCRR822.11 [eff Dec. 27, 2006]). Here, petitioner was found chargeable with violations regardingfacilities requirements (see 14 NYCRR 814.3), general service standards (see 14NYCRR 822.2), admission and post-admission procedures (see 14 NYCRR 822.3,822.4), record keeping (see 14 NYCRR 822.5), quality improvement and utilizationreview (see 14 NYCRR 822.6), staffing (see 14 NYCRR 822.7) and additionalrequirements applicable to services that provide compulsive gambling treatment (see 14NYCRR 822.10). While in conjunction with his determination regarding counselor compensationlevels the Hearing Officer referred to 14 NYCRR 822.11 (k), there was no charge, let alone adetermination, that petitioner violated that regulation, nor was there any indication that section822.11 was retroactively applied.
Petitioner next contends that the Commissioner's determination to revoke the operatingcertificate without according petitioner the opportunity to implement corrective measuresviolates its substantive due process rights. While we agree that petitioner had a protectedproperty interest in its operating certificate (see generally St. Joseph Hosp. of Cheektowaga v [*4]Novello, 43 AD3d 139, 143 [2007], appealdismissed 9 NY3d 988 [2007], lv denied 10 NY3d 702 [2008]; Honey DippersSeptic Tank Servs. v Landi, 198 AD2d 402, 403 [1993]), petitioner has failed to demonstrate" 'that the governmental action was wholly without legal justification' " (Matter of Collins vDukes Plumbing & Sewer Serv., Inc., 75 AD3d at 702, quoting Bower Assoc. v Town of Pleasant Val.,2 NY3d 617, 627 [2004]). OASAS's investigation was prompted, in part, by petitioner'sbilling practices, the excessive length of patient stay and number of patient visits, among otherthings, which resulted in petitioner being the "largest outpatient clinic provider in the system" forMedicaid billing purposes when compared to similar facilities. Furthermore, in conjunction withthe investigation and ultimate determination, petitioner was provided with the requisite noticeand an opportunity to be heard pursuant to Mental Hygiene Law § 32.21 (a) (see Testwell, Inc. v New York City Dept.of Bldgs., 80 AD3d 266, 274 [2010]; Matter of Tyler v New York State Commr. ofMotor Vehs., 284 AD2d 645, 646 [2001]; Torres v New York City Taxi & LimousineCommn., 268 AD2d 340 [2000]).
Nor do we find that petitioner's equal protection rights were violated based on selectiveenforcement. Petitioner argues that OASAS improperly conducted an investigation of petitionerby using the same policies and procedures used to conduct a recertification review, but withoutthe opportunity to implement a CAP. An equal protection violation based upon selectiveenforcement arises where "first, a person (compared with others similarly situated) isselectively treated and second, such treatment is based on impermissible considerationssuch as race, religion, intent to inhibit or punish the exercise of constitutional rights, or maliciousor bad faith intent to injure a person" (Bower Assoc. v Town of Pleasant Val., 2 NY3d at631; see Matter of Ken Mar Dev., Inc. vDepartment of Pub. Works of City of Saratoga Springs, 53 AD3d 1020, 1024 [2008];Matter of Gray v Town of Oppenheim, 289 AD2d 743, 745 [2001], lv denied 98NY2d 606 [2002]). Given that petitioner does not allege selective treatment based on race,religion or punishment for the exercise of constitutional rights, it must demonstrate that OASASsingled out petitioner for an investigation with malevolent intent (see Bower Assoc. v Townof Pleasant Val., 2 NY3d at 631). In this case, there is no proof that petitioner was treateddifferently than other similarly situated facilities—in terms of other facilities having beenthe subject of an investigation pursuant to Mental Hygiene Law § 32.13 but, unlikepetitioner, were treated more favorably in that they were provided with the opportunity toimplement a CAP before penalties were imposed (see id. at 632). Furthermore, therequisite showing of improper motivation is lacking. Petitioner's billing practices, length ofpatient stay and number of patient visits, among other things, provided a rational basis for theinvestigation, such that petitioner failed to establish a violation of its equal protection rights(see Matter of Gray v Town of Oppenheim, 289 AD2d at 745).
To the extent that petitioner argues that the Hearing Officer arbitrarily disregarded thetestimony of its experts, we note that "matters of credibility and the weight to be accorded anexpert's testimony is solely within the province of the [administrative fact finder]" (Matter of Forester v State Bd. forProfessional Med. Conduct, 36 AD3d 1127, 1128 [2007], lv denied 8 NY3d 812[2007]). Furthermore, in light of the regulations, which provide that outpatient services shall"promote the achievement and maintenance of abstinence and recovery from chemicaldependence and abuse" (14 NYCRR 822.2 [b] [1]), we are unpersuaded that the Hearing Officersubstituted his own opinion for that of an expert when he rejected certain testimony that asubstance abuse addict should remain in treatment for the rest of his or her life. Finally, given themultitude of violations found, we find that the penalty of revocation of petitioner's operatingcertificate was not "so disproportionate to the offense as to be shocking to one's sense of fairness,thus constituting an abuse of discretion" (Matter of Kelly v Safir, 96 [*5]NY2d 32, 38 [2001] [internal quotation marks omitted]; seeMatter of Rubenfeld v New York State Ethics Commn., 43 AD3d at 1200; Matter of Sookhu v Commissioner ofHealth of State of N.Y., 31 AD3d 1012, 1014 [2006]; Matter of Rogers v Sherburne-EarlvilleCent. School Dist., 17 AD3d 823, 824 [2005]; Matter of Alaimo v Ambach, 91AD2d 695, 696 [1982], lv denied 58 NY2d 607 [1983]).
Spain, J.P., Lahtinen and Garry, JJ., concur. Adjudged that the determination is confirmed,without costs, and petition dismissed.
Footnote *: Although this proceeding wasproperly transferred to this Court, inasmuch as petitioner does not raise a substantial evidencechallenge in its brief, we deem any issue in this regard to be abandoned (see Matter of Edwards v Goord, 11AD3d 832, 833 n [2004]).