Court Opinion

ID: 9952471
Source: CourtListenerOpinion
Date Created: 2024-03-19 20:09:18.051347+00
Date Added: 2024-06-11T14:39:58.817176
License: Public Domain

People Care Inc. v Contract Dispute Resolution Bd. of
                     the City of N.Y.
               2024 NY Slip Op 30810(U)
                     March 13, 2024
           Supreme Court, New York County
        Docket Number: Index No. 161749/2023
                  Judge: Arlene P. Bluth
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
 Op 30001(U), are republished from various New York
 State and local government sources, including the New
  York State Unified Court System's eCourts Service.
 This opinion is uncorrected and not selected for official
                       publication.
                                                                                                                     INDEX NO. 161749/2023
  NYSCEF DOC. NO. 35                                                                                           RECEIVED NYSCEF: 03/13/2024

                                   SUPREME COURT OF THE STATE OF NEW YORK
                                             NEW YORK COUNTY
            PRESENT:             HON. ARLENE P. BLUTH                                            PART                              14
                                                                                      Justice
            ---------------------------------------------------------------------------------X   INDEX NO.          161749/2023
             PEOPLE CARE INCORPORATED,
                                                                                                 MOTION DATE         03/08/2024
                                                         Petitioner,
                                                                                                 MOTION SEQ. NO.         001
                                                 -v-
             CONTRACT DISPUTE RESOLUTION BOARD OF THE
             CITY OF NEW YORK, NEW YORK CITY HUMAN                                                 DECISION + ORDER ON
             RESOURCES ADMINISTRATION                                                                    MOTION

                                                         Respondents.
            ---------------------------------------------------------------------------------X

            The following e-filed documents, listed by NYSCEF document number (Motion 001) 1 - 21, 25, 26, 27,
            28, 29, 30, 31, 32, 33, 34
            were read on this motion to/for                                                       ARTICLE 78                       .

                      The petition to annul a determination made by respondent the Contract Dispute

            Resolution Board (“CDRB”) is denied.

            Background

                      The instant proceeding arises out of an audit performed by the New York City Human

            Resources Administration (“HRA”) relating to funds receive by petitioner under the Health Care

            Reform Act (“HCRA”) of 2000. Petitioner admits it received grants in 2003 and 2004 from the

            state Department of Health (“DOH”). According to petitioner, these funds were to be used for

            the recruitment and retention of personal care service workers.

                      Petitioner observes that this dispute has been heavily litigated for more than a decade. It

            claims that the prior litigation addressed whether or not HRA had legal authority over HCRA

            grants. Petitioner insists that HRA did not conduct an audit of the years 2003 and 2004 until

             161749/2023 PEOPLE CARE INCORPORATED vs. CONTRACT DISPUTE RESOLUTION BOARD                              Page 1 of 5
             OF THE CITY OF NEW YORK ETAL
             Motion No. 001

                                                                           1 of 5
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                                                                                                  INDEX NO. 161749/2023
  NYSCEF DOC. NO. 35                                                                      RECEIVED NYSCEF: 03/13/2024

            2008 and, by then, petitioner had already spent all of the money it received from the DOH for

            both 2003 and 2004.

                    It maintains that HRA’s demand for the return of the funds is arbitrary and capricious as

            it is based on the fact that these funds were not spent in the year in which they were received.

            Petitioner argues that HRA and DOH never adopted a policy requiring entities like petitioner to

            spend these grants in the same year in which they were received. It observes that CDRB, in a

            decision dated August 4, 2023, refused to vacate HRA’s determination requiring petitioner to

            pay back these funds.

                    The CDRB’s decision stated that petitioner provided personal care services to Medicaid

            patients pursuant to contracts with HRA (NYSCEF Doc. No. 24 at 2). These “contracts

            authorize HRA to conduct annual fiscal audits and to recoup any Medicaid funds that exceed a

            provider’s actual costs” (id.). CDRB noted that petitioner argued that “there is no time limitation

            on the use of HCRA funds and challenges the recoupment demand on that basis” (id. at 4). It

            noted, “[t]hat exact argument, however, was rejected by the Appellate Division in related

            litigation by a different provider” (id.).

                    CDRB emphasized that it had previously sided with the provider’s argument, the same

            one advanced by petitioner here, and that the Appellate Division, First Department disagreed (id.

            at 4-5). It concluded that:

                     “The Appellate Division’s decision in N.Y. Health Care, Inc. resolves the issue
                    here. Interpreting a nearly identical contract, the court held that HRA’s annual
                    auditing and recoupment of Medicaid funds left unspent during each fiscal year is
                    in accordance with the parties’ 2001 contract. Thus, far from being arbitrary,
                    capricious, and without any basis in law, HRA’s recoupment of HCRA funds that
                    are left unspent during each fiscal year comports with the parties’ contracts. People
                    Care attempts to distinguish that case because, unlike N.Y. Health Care, Inc., it had
                    already spent the HCRA funds by the time of the audit. The dispositive and
                    undisputed fact, however, is that the funds were not expended in the fiscal year

             161749/2023 PEOPLE CARE INCORPORATED vs. CONTRACT DISPUTE RESOLUTION BOARD           Page 2 of 5
             OF THE CITY OF NEW YORK ETAL
             Motion No. 001

                                                          2 of 5
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                                                                                                   INDEX NO. 161749/2023
  NYSCEF DOC. NO. 35                                                                       RECEIVED NYSCEF: 03/13/2024

                   received. Accordingly, HRA is entitled to recoup those HCRA funds” (id. at 5
                   [internal quotations and citations omitted]).

                   Petitioner insists that it was arbitrary to order the recoupment of these funds where it

            undoubtedly spent these funds for the correct purposes, albeit not in the same fiscal year in

            which it was received.

                   HRA opposes the petition and contends that CDRB’s decision was supported by

            applicable law. It stresses that CDBR’s determination simply followed a binding appellate

            decision. It emphasizes that this Court’s review of the subject decision is limited and does not

            extend to considering the fairness of CDRB’s ruling.

                   CDRB files an answer in which it claims it has no interest in the outcome of the instant

            proceeding and merely reached a determination for the “real parties in interest,” petitioner and

            HRA.

                   In reply, petitioner argues that HRA does not contest petitioner’s arguments about the

            practical economic effects of requiring it to pay back nearly $7 million. It insists that no court

            has held that HRA can recoup funds that were already spent by a provider prior to the audit.

            Discussion

                   “Judicial review of a CDRB determination is limited to the question of whether it was

            made in violation of lawful procedure, was affected by an error of law, or was arbitrary or

            capricious or an abuse of discretion” (Start El., Inc. v City of New York, 104 AD3d 488, 488, 961

            NYS2d 119 [1st Dept 2013] [internal quotations and citation omitted]).

                   In 2021, the Court of Appeals “conclude[d] that the funds for personal care services paid

            to petitioner People Care, Inc. under the Health Care Reform Act (Public Health Law §§ 2807–

            v[1][bb][i], [iii]) are Medicaid funds subject to the audit and recoupment authority of the City of

            New York Human Resources Administration (HRA)” (People Care Inc. v City of New York

             161749/2023 PEOPLE CARE INCORPORATED vs. CONTRACT DISPUTE RESOLUTION BOARD            Page 3 of 5
             OF THE CITY OF NEW YORK ETAL
             Motion No. 001

                                                           3 of 5
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                                                                                                   INDEX NO. 161749/2023
  NYSCEF DOC. NO. 35                                                                       RECEIVED NYSCEF: 03/13/2024

            Human Resources Admin., 36 NY3d 1088, 1090, 143 NYS3d 329 [2021]). Moreover, the

            Appellate Decision, First Department, in a subsequent decision, observed that “the annual

            auditing and recoupment of Medicaid funds left unspent during each fiscal year” complied with a

            contract similar to the one at issue here (City of New York v Contr. Dispute Resolution Bd. of

            City of New York, 202 AD3d 532, 534, 164 NYS3d 71 [1st Dept 2022]).

                   The Court finds that the CDRB’s determination is rational under the above-cited First

            Department case. That case noted, in a situation involving a similar contract, that recoupment of

            funds left unspent during a fiscal year comports with the service provider contract (id.).

            Petitioner’s claims that there were no specific findings about entities that already spent the

            money does not compel a different outcome.

                   CDRB noted that “That there was some legal uncertainty about the status of HCRA

            funds, as People Care asserts, is all the more reason it should have exercised diligence before it

            expended these funds beyond the fiscal year they were received” and that “People Care has not

            shown that it was reasonable to assume that HCRA funds would be treated differently from other

            Medicaid funds” (NYSCEF Doc. No. 24 at 5). As stated above, this Court’s task in reviewing a

            CDRB decision is to evaluate whether or not the decision was irrational. The Court cannot

            substitute its own judgment for that of the CDRB or annul a determination simply because it

            could be interpreted as being unfair.

                   Here, the CDRB decision was exceedingly rational. CDRB even noted that it had

            previously agreed with petitioner’s position that funds could only be recouped if they were spent

            for an improper purpose (id. at 4). But CDRB stressed that this position was rejected by the

            Appellate Division, First Department and it was bound by that holding. This Court, too, is bound

            by the decision of the Appellate Division.

             161749/2023 PEOPLE CARE INCORPORATED vs. CONTRACT DISPUTE RESOLUTION BOARD            Page 4 of 5
             OF THE CITY OF NEW YORK ETAL
             Motion No. 001

                                                          4 of 5
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                                                                                                   INDEX NO. 161749/2023
  NYSCEF DOC. NO. 35                                                                         RECEIVED NYSCEF: 03/13/2024

                    Accordingly, it is hereby

                    ADJUDGED that the petition is denied and this proceeding is denied without costs or

            disbursements upon presentation of proper papers therefor.

                   3/13/2024                                                            $SIG$
                      DATE                                                      ARLENE P. BLUTH, J.S.C.
             CHECK ONE:              X   CASE DISPOSED                   NON-FINAL DISPOSITION

                                                                                                  □
                                         GRANTED          X   DENIED     GRANTED IN PART              OTHER

             APPLICATION:                SETTLE ORDER                    SUBMIT ORDER

                                                                                                  □
             CHECK IF APPROPRIATE:       INCLUDES TRANSFER/REASSIGN      FIDUCIARY APPOINTMENT        REFERENCE

             161749/2023 PEOPLE CARE INCORPORATED vs. CONTRACT DISPUTE RESOLUTION BOARD            Page 5 of 5
             OF THE CITY OF NEW YORK ETAL
             Motion No. 001

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