Court Opinion

ID: 9958781
Source: CourtListenerOpinion
Date Created: 2024-04-09 20:11:49.109375+00
Date Added: 2024-06-11T08:15:52.432281
License: Public Domain

Neurosurgical Assoc. PC v New York State Dept. of
                       Fin. Servs.
               2024 NY Slip Op 31024(U)
                     March 27, 2024
            Supreme Court, New York County
        Docket Number: Index No. 160178/2023
                  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. 160178/2023
  NYSCEF DOC. NO. 40                                                                                           RECEIVED NYSCEF: 03/27/2024

                                   SUPREME COURT OF THE STATE OF NEW YORK
                                             NEW YORK COUNTY
            PRESENT:             HON. ARLENE P. BLUTH                                            PART                              14
                                                                                      Justice
            ---------------------------------------------------------------------------------X   INDEX NO.          160178/2023
             NEUROSURGICAL ASSOCIATES PC,
                                                                                                 MOTION DATE             N/A
                                                         Petitioner,
                                                                                                 MOTION SEQ. NO.         001
                                                 -v-
             NEW YORK STATE DEPARTMENT OF
             FINANCIAL SERVICES and ADRIENNE A. HARRIS                                             DECISION + ORDER ON
             as SUPERINTENDENT of the NEW YORK STATE                                                     MOTION
             DEPARTMENT OF FINANCIAL SERVICES,
                                        Respondents.
            ---------------------------------------------------------------------------------X

            The following e-filed documents, listed by NYSCEF document number (Motion 001) 1- 5, 7, 8, 9, 10, 11,
            12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37
            were read on this motion to/for                                                       ARTICLE 78                       .

                      Respondents’ cross-motion to dismiss the petition is granted.

            Background

                      This proceeding arises out of a dispute resolution process under section 601 of the

            Financial Services Law afforded to providers (like petitioner) relating to payment disputes

            concerning emergency services or surprise medical bills. Essentially, when there is a dispute

            between a provider and an insurance plan, that disagreement is handled by an independent

            dispute resolution entity (“IDRE”). Petitioner observes that when this process was originally

            established there were no time limitations put on providers seeking payments. Effective in April

            2022, the relevant statute was amended to provide that “Disputes shall be submitted to an

            independent dispute resolution entity within three years of the date the health care plan made the

            original payment on the claim that is the subject of the dispute” (Financial Services Law § 601).

             160178/2023 NEUROSURGICAL ASSOCIATES PC vs. NEW YORK STATE DEPARTMENT OF                                Page 1 of 6
             FINANCIAL SERVICES ET AL
             Motion No. 001

                                                                           1 of 6
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                                                                                                   INDEX NO. 160178/2023
  NYSCEF DOC. NO. 40                                                                       RECEIVED NYSCEF: 03/27/2024

                   Petitioner insists that when it submitted claims concerning six different disputes in June

            2022, it was told that these disputes were time barred as they were more than three years old.

            Petitioner complains that respondents improperly imposed a retroactive application of the 2022

            amendment to the Financial Services Law. It claims that the legislation did not expressly

            indicate that it should be applied retroactively, that to do so violated the State Administrative

            Procedure Act (“SAPA”) as respondents did not follow the appropriate rulemaking process, and

            that it violates fundamental notions of due process. Petitioner argues that there should be some

            sort of grace period to allow older claims to be adjudicated in the dispute resolution process

            instead of a sudden and drastic change in how these disputes are administered.

                   Respondents cross-move to dismiss on timeliness grounds. They point out that petitioner

            docketed the six disputes in question in June 2022 and that the IDREs assigned to hear the

            disputes notified petitioner that they were all time barred in notices sent between June 26 and

            July 7, 2022. Respondents acknowledge that on June 27, 2022 (after three dismissal notices were

            sent), petitioner’s counsel sent an email to respondents inquiring about the dismissal.

                   Respondents insisted that the “denials are appropriate” and that “There is no language in

            the law that states it is prospective only” (NYSCEF Doc. No. 3 at 3). They acknowledge that at

            the end of the email chain, respondents offered to take a look at any language upon which

            petitioner might be relying, but argue that petitioner never followed up. Respondents also insist

            that petitioner never contacted them about the additional dismissal notices sent on June 28, June

            29 and July 7, 2022.

                   They observe that petitioner then commenced a special proceeding in August 2022 to

            vacate the IDRE dismissals. The judge assigned to that proceeding dismissed the case based on

            the failure to name respondents as a necessary party. Respondents observe that although

             160178/2023 NEUROSURGICAL ASSOCIATES PC vs. NEW YORK STATE DEPARTMENT OF              Page 2 of 6
             FINANCIAL SERVICES ET AL
             Motion No. 001

                                                          2 of 6
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                                                                                                     INDEX NO. 160178/2023
  NYSCEF DOC. NO. 40                                                                         RECEIVED NYSCEF: 03/27/2024

            petitioners filed a notice of appeal, petitioner’s counsel did not perfect that appeal. Instead, rather

            than appeal, petitioner sent a letter in June 2023 requesting respondents’ position on the

            retroactivity issue. Respondents conclude that this entire proceeding is time barred as petitioner

            did not bring it within four months of the June and July 2022 determinations dismissing their

            claims.

                      In opposition to the cross-motion, petitioner argues that its claims are timely because the

            emails from respondents in June 2022 do not constitute a final and binding decision. It maintains

            that the invitation to petitioner to send additional language was not a clear or definitive

            determination that started the accrual of the limitations period. It insists that the limitations

            period began when it sent a letter to respondents on June 23, 2023 asking about their position on

            the retroactive application of the subject statute. Petitioner argues that its SAPA claims are also

            timely under this same theory.

                      In reply, respondents observe that petitioner commenced a proceeding in 2022 in which it

            made numerous representations that respondents had reached a definitive position about the

            retroactivity issue. They emphasize that petitioner did not respond to respondents’ offer for

            additional comment in the June 2022 email conversation. Respondents contend that petitioner

            cannot manufacture a new accrual date for the limitations period by sending a letter a year after

            the 2022 dismissals of its claims.

            Discussion

                      The Court finds that the instant proceeding is time-barred. Petitioner does not dispute

            that it attempted to seek review of 6 claims before IDREs in June 2022 and that each of these

            claims were dismissed (NYSCEF Doc. No. 1 [dismissal letters]). Each of these letters explicitly

            noted that petitioner’s claims were rejected because of the three-year limitations period (id.). To

             160178/2023 NEUROSURGICAL ASSOCIATES PC vs. NEW YORK STATE DEPARTMENT OF                Page 3 of 6
             FINANCIAL SERVICES ET AL
             Motion No. 001

                                                            3 of 6
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                                                                                                   INDEX NO. 160178/2023
  NYSCEF DOC. NO. 40                                                                       RECEIVED NYSCEF: 03/27/2024

            be sure, these letters were from the IDREs themselves. But they evidenced a clear indication

            concerning the precise nature of respondents’ position—namely, that the 2022 legislation had

            retroactive effect.

                    Moreover, the email chain from June 2022 makes respondents’ position quite obvious.

            Respondents insisted that the dismissals were correct (NYSCEF Doc. No. 3 at 3). Petitioner’s

            assertion that respondents’ invitation for the submission of “additional language” concerning the

            retroactivity issue somehow created confusion is without merit. Petitioner does not contend that

            it quickly followed up; instead, the timeline on this record shows that petitioner received three

            more claim dismissals following this email exchange and did not question respondents about

            them. Any rational reading of the dismissals and the email communications yields the

            conclusion that petitioner was well aware that respondents viewed the 2022 legislation to have

            retroactive effect. In other words, when all of petitioner’s claims were dismissed and respondents

            declined to change its clearly held position, petitioner had sufficient notice of a final and binding

            determination.

                    Moreover, petitioner’s own positions in the 2022 special proceeding it commenced

            confirms that petitioner viewed the IDRE dismissals as final and binding. Petitioner commenced

            an Article 75 petition in August 2022 to challenge those dismissals and observed that it was

            challenging “determinations” (NYSCEF Doc. No. 21, ¶ 4 [verified petition in special

            proceeding). In fact, petitioner’s memorandum of law in support of the petition argues that “both

            the IDR Entities and the New York State Department of Financial Services interpreted the newly

            enacted SOL to be retroactive and therefore dismissed the instant six IDR arbitrations”

            (NYSCEF Doc. No. 22 at 2).

             160178/2023 NEUROSURGICAL ASSOCIATES PC vs. NEW YORK STATE DEPARTMENT OF              Page 4 of 6
             FINANCIAL SERVICES ET AL
             Motion No. 001

                                                          4 of 6
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                                                                                                  INDEX NO. 160178/2023
  NYSCEF DOC. NO. 40                                                                       RECEIVED NYSCEF: 03/27/2024

                    Petitioner also admits that “When [petitioner’s] counsel argued that the SOL should have

            been applied prospectively, the DFS ‘Consumer Assistance Unit’ took the position that the

            Budget’s three-year SOL applied immediately and retroactively upon passage” (id. at 4).

                    Simply put, petitioner cannot claim that it had no idea about respondents’ definitive

            position concerning retroactivity when it made contrary affirmative representations in a prior

            proceeding. The Court observes that the verified petition is from August 2022 and the

            memorandum of law is from July 2022, which makes the instant proceeding (commenced in

            October 2023) time barred.

                    Petitioner’s letter sent in June 2023 (NYSCEF Doc. No. 4) does not restart the limitations

            period. In 2022, petitioner knew full well that respondents viewed the 2022 legislation to have

            retroactive effect; as respondents correctly argued, petitioner cannot “manufacture” a new

            accrual date for the statute of limitations by sending this letter.

                    Having found that the Article 78 claims are time barred, the Court must consider whether

            the remaining requests for relief are also time barred. The Court finds that because the SAPA

            claims allege, essentially, that respondents’ retroactivity position was made “in violation of

            lawful procedure,” it is subject to the same four-month limitations period applicable to Article 78

            proceedings (Carr v New York State Div. of Hous. and Community Renewal, 217 AD3d 442,

            444, 188 NYS3d 503(Mem) [1st Dept 2023] [finding that petitioners’ argument that an agency

            did not follow SAPA was time barred as it was not brought within four months]).

                    As respondents point out, petitioner’s position that the SAPA violation claim is timely

            would grant it an indefinite statute of limitations. Petitioner could simply assert that an agency

            action is an improperly promulgated rule regardless of when this action was taken. Here,

             160178/2023 NEUROSURGICAL ASSOCIATES PC vs. NEW YORK STATE DEPARTMENT OF              Page 5 of 6
             FINANCIAL SERVICES ET AL
             Motion No. 001

                                                            5 of 6
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                                                                                                      INDEX NO. 160178/2023
  NYSCEF DOC. NO. 40                                                                            RECEIVED NYSCEF: 03/27/2024

            petitioner clearly knew about respondents’ position (and plead as much) a year prior to bringing

            this petition.

                    The Court also finds that petitioner’s remaining claims relating to declaratory relief and

            alleged due process violations are also time bared because they “are cognizable under CPLR

            article 78” (Ugo-Alum v New York State Dept. of Motor Vehicles, 211 AD3d 500, 501 [1st Dept

            2022], lv to appeal denied, 39 NY3d 912 [2023]).

                    Accordingly, it is hereby

                    ADJUDGED that respondents’ cross-motion to dismiss is granted, the petition is

            dismissed and the Clerk is directed to enter judgment accordingly along with costs and

            disbursements to respondents upon presentation of proper papers therefor.

                    3/27/2024                                                           $SIG$
                      DATE                                                      ARLENE P. BLUTH, J.S.C.
             CHECK ONE:               X   CASE DISPOSED                 NON-FINAL DISPOSITION

                                          GRANTED             DENIED    GRANTED IN PART              X     OTHER

             APPLICATION:                 SETTLE ORDER                  SUBMIT ORDER

             CHECK IF APPROPRIATE:        INCLUDES TRANSFER/REASSIGN    FIDUCIARY APPOINTMENT              REFERENCE

             160178/2023 NEUROSURGICAL ASSOCIATES PC vs. NEW YORK STATE DEPARTMENT OF                    Page 6 of 6
             FINANCIAL SERVICES ET AL
             Motion No. 001

                                                            6 of 6
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