| Matter of Adirondack Med. Center-Uihlein v Daines |
| 2014 NY Slip Op 05386 [119 AD3d 1175] |
| July 17, 2014 |
| Appellate Division, Third Department |
[*1]
| 1 In the Matter of Adirondack Medical Center-Uihlein etal., Appellants, v Richard F. Daines, as Commissioner of Health et al.,Respondents. |
Bond, Schoeneck & King, PLLC, Albany (Raul A. Tabora Jr. of counsel), forappellants.
Eric T. Schneiderman, Attorney General, Albany (Victor Paladino of counsel), forrespondents.
McCarthy, J. Appeal from a judgment of the Supreme Court (McNamara, J.), enteredNovember 16, 2012 in Albany County, which granted respondents' motion to convert theaction to a proceeding pursuant to CPLR article 78 and dismiss the petition.
Petitioners are the owners and operators of residential health care facilities that arelicensed by the Department of Health (hereinafter DOH) pursuant to Public Health Lawarticle 28. Respondent Commissioner of Health oversees DOH, which is responsible fordetermining Medicaid reimbursement rates for medical services provided at petitioners'facilities, and respondent Director of the Budget is responsible for approving such rates(see Public Health Law § 2807 [3]). In 2006, the Legislatureamended Public Health Law § 2808 to change the base years for calculatingreimbursement rates, and included an extended transition period (see L 2006, ch109, § 1, part C, § 47; Public Health Law § 2808[2-b]). Petitioners commenced a declaratory judgment action seeking a declaration thatthe reimbursement rate calculations for the period of January 1, 2009 to March 31, 2009incorrectly applied certain reduction provisions that had expired in 2006, and sought anorder directing respondents to recompute their reimbursement rates for that time period.Following joinder of issue, petitioners moved for summary judgment. [*2]Respondents cross-moved to convert the action to a CPLRarticle 78 proceeding and for dismissal of the converted proceeding. Supreme Courtgranted respondents' cross motion to convert the proceeding and dismissed the petition asuntimely. Petitioners appeal.
Supreme Court properly converted the declaratory judgment action to a proceedingpursuant to CPLR article 78. "Where, as here, governmental activity is being challenged,the immediate inquiry is whether the challenge could have been advanced in a CPLRarticle 78 proceeding" (Spinneyat Pond View, LLC v Town Bd. of the Town of Schodack, 99 AD3d 1088, 1089[2012] [internal quotation marks and citation omitted]; accord Thrun v Cuomo, 112AD3d 1038, 1040 [2013], lv denied 22 NY3d 865 [2014]). Petitioners arenot challenging any legislation, but are instead challenging the determinations of anadministrative agency applying such legislation, rendering this the type of challenge thatshould be brought under CPLR article 78 (see Walton v New York State Dept. of Correctional Servs., 8NY3d 186, 194 [2007]; Matter of Grand Manor Nursing Home Health Related Facility, Inc.v Novello, 39 AD3d 1062, 1064 [2007], lv denied 9 NY3d 812 [2007]).Accordingly, the court properly converted the action to a proceeding and determined thata four-month statute of limitations applies (see CPLR 103 [c]; 217 [1]).
Supreme Court erred in dismissing the proceeding as untimely. Respondents contendthat the proceeding was untimely because it was commenced 11 months after DOH sentFebruary 2009 letters to petitioners informing them of their interim 2009 reimbursementrates. Petitioners contend that this January 2010 proceeding was timely commenced lessthan four months after they received DOH's September 2009 letters informing them oftheir final reimbursement rates for 2009. The statute of limitations for a challenge to agovernmental determination begins to run when "the determination to be reviewedbecomes final and binding upon the petitioner" (CPLR 217 [1]), which occurs when thepetitioner has been aggrieved because the determination has an impact upon that party(see Matter of Edmead v McGuire, 67 NY2d 714, 716 [1986]; Matter ofResurrection Nursing Home v New York State Dept. of Health, 298 AD2d 752, 753[2002], lv denied 100 NY2d 502 [2003]). "[W]hen an administrative body itselfcreates ambiguity and uncertainty" concerning the finality of a determination, however,"affected [parties] should not have to risk dismissal for prematurity or untimeliness bynecessarily guessing when a final and binding determination has or has not been made.Under these circumstances, 'the courts should resolve any ambiguity created by the publicbody against it in order to reach a determination on the merits and not deny a party his [orher] day in court' " (Mundy v Nassau County Civ. Serv. Commn., 44NY2d 352, 358 [1978], quoting Matter of Castaways Motel v Schuyler, 24 NY2d120, 126-127 [1969], adhered to on rearg 25 NY2d 692 [1969]; see Matter ofEdmead v McGuire, 67 NY2d at 716; Matter of Catskill Regional Off-Track Betting Corp. v New YorkState Racing & Wagering Bd., 56 AD3d 1027, 1029 [2008]; see also Matter of Board of Educ.of the Kiryas Joel Vil. Union Free Sch. Dist. v State of New York, 110 AD3d1231, 1232-1233 [2013], lv denied 22 NY3d 861 [2014]).
The February 2009 letters—which were sent to petitioners shortly after theLegislature amended Public Health Law § 2808 to extend the transitionperiod for implementing the change in base years for reimbursement (see L 2009,ch 2, § 1, part I, §§ 2, 3)—state that "[t]his rate isan interim 2009 rate that will be used solely for 2009 billing purposes and untilan actual 2009 rate can be published in accordance with applicable law"(emphasis added). One reasonable inference to draw from the use of the word "actual" todescribe the latter mentioned rate but not the former mentioned rate was that the interimrate was not an actual rate. The word "pending" appeared at the top of each page of therate calculation sheets enclosed with those letters, which [*3]could reasonably be interpreted as suggesting that the 2009rate was not yet settled. Because DOH created ambiguity and did not make clear in itsFebruary 2009 letters that the "interim" rates were final and binding on petitioners, weresolve the ambiguity against respondents (see Mundy v Nassau County Civ. Serv.Commn., 44 NY2d at 358). As the statute of limitations did not start to run untilpetitioners received the September 2009 letters that included their final 2009reimbursement rates, this proceeding was timely commenced.
Nevertheless, DOH's interpretation of Public Health Law § 2808, andits determinations regarding the rate reimbursement methodology, were notunreasonable. "DOH is entitled to a high degree of judicial deference, especially when. . . act[ing] in the area of its particular expertise, and thus petitioners bearthe heavy burden of showing that DOH's rate-setting methodology is unreasonable andunsupported by any evidence" (Matter of Grand Manor Nursing Home HealthRelated Facility, Inc. v Novello, 39 AD3d at 1064 [internal quotation marks andcitations omitted]; see Matter ofNazareth Home of the Franciscan Sisters v Novello, 7 NY3d 538, 544 [2006]).The rebasing law, which changed the reimbursement base year from 1983 to 2002,originally included a two-year transition period covering 2007 and 2008, but theLegislature extended the transition period until March 31, 2009 (see PublicHealth Law § 2808 [2-b]; L 2009, ch 2, § 1, part I,§§ 2, 3). For reimbursement periods after 2006, the Legislatureeliminated certain reduction provisions, including the administrative and fiscal cap andthe efficiency reduction (see Public Health Law § 2808 [14], [16]).Petitioners complain that respondents disregarded the statute by applying those expiredreduction provisions during the January 2009 to March 2009 time period. We disagree.The rebasing law directs DOH to calculate the operating cost component of a facility'sreimbursement rate for January 2008 through March 2009 to reflect the December 31,2006 rate, adjusted for inflation (see Public Health Law § 2808[2-b] [a] [i]). Thus, although those two reduction provisions expired at the end of 2006,the Legislature specifically directed that DOH utilize and reflect the 2006 rates, whichnecessarily included those reduction provisions.
For 2007 and 2008, petitioners did not suffer any actual loss as a result of thosereduction provisions because the rebasing law provided an alternative rate adjustment tocompensate facilities for the loss of those two reduction provisions; the statute alsoallocated a specified amount of funding for the alternative rate adjustments during 2007and 2008 (see Public Health Law § 2808 [2-b] [a] [ii]). Whilepetitioners contend that DOH should have included an alternative rate adjustment to theirreimbursement rates for the period of January 2009 through March 2009, the statute doesnot provide such an adjustment or any related funding during that time period(see Public Health Law § 2808 [2-b] [a] [ii]; L 2009, ch 2,§ 1, part I, §§ 2, 3). Inasmuch as DOH's methodologyand interpretation of the law were reasonable and supported by the statute's plainlanguage, petitioners failed to meet their heavy burden on their challenge (see Matterof Nazareth Home of the Franciscan Sisters v Novello, 7 NY3d at 544; Matter of Avenue Nursing Home& Rehabilitation Ctr. v Shah, 112 AD3d 1178, 1181 [2013]). Accordingly,respondents were entitled to dismissal of the petition.
Lahtinen, J.P., Garry, Lynch and Clark, JJ., concur. Ordered that the judgment isaffirmed, without costs.