Court Opinion

ID: 5865897
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:32:53.963684+00
Date Added: 2024-06-11T08:44:34.643783
License: Public Domain

— Judgment, affirmed, with costs. Memorandum: In this CPLR article 78 proceeding petitioner, which is a skilled nursing facility, seeks judgment declaring that its per diem reimbursement rates for Medicaid patients were properly established and paid at the rate of $62.17 for 1978 and $66.19 for 1979. The petition also seeks an order enjoining respondents from recouping sums claimed to have been overpaid to petitioner. The judgment appealed from granted the petition, and essentially for reasons stated in the decision at Special Term (Doyle, J.), we affirm. We add only the following: The rates of $62.17 and $66.19 were established by respondent Axelrod after management assessment reviews (see 10 NYCRR 86-2.14 [a] [7], eff Sept. 30, 1977) which petitioner requested, respectively, in late 1977 for the year 1978, and in 1978 for the year 1979. Based on petitioner’s actual per diem patient costs of $60.10 for 1978 and $64.01 for 1979, respondent Axelrod notified petitioner in February, 1981 that the reimbursement rates for those years were retroactively reduced to coincide with petitioner’s actual costs and thereafter, through respondent Buscaglia, advised petitioner that recoupment of approximately $107,000 would be sought. Petitioner objected to the retroactive readjustments and recoupment and claimed that only 55% of the facility’s operating costs was considered in the management assessment reviews and that the lower actual operating costs resulted from economies in areas not considered in these reviews. Its request for a hearing was denied. In justification of his action, respondent Axelrod asserts that it is his “policy” to retrospectively establish rates based upon actual costs, and to seek recoupment in every case where actual costs are less than those previously established upon management assessment review. Respondent, however, has not promulgated a regulation setting forth such policy, and he offers no basis in this record to support a finding that petitioner had notice that there was such a policy. Indeed, to the contrary, he admits in his answer that the 1978 and 1979 rates were “final.” Furthermore, there is no claim here that the rates were erroneous or illegal. Under these circumstances, the action of respondent Axelrod, which was declared almost 14 months after expiration of the subject years, must be viewed as arbitrary and capricious (CPLR 7803, subd 3; cf. Matter of Severino v Ingraham, 44 NY2d 763; see Hurlbut v Whalen, 58 AD2d 311, mot for lv to app den 43 NY2d 643). We conclude that in the circumstances presented there is no valid reason for respondent Axelrod to deviate from his well-established policy of allowing health providers to keep the difference in savings between its final prospective rates and actual operating costs. Finally, respondents have failed *980to show that recoupment of payments made in excess of actual costs for the years 1978 and 1979 will have any effect upon rates for subsequent years. Under the statutory and regulatory scheme, rates for subsequent years will still be dependent in part upon actual costs incurred by petitioner in the years 1978 and 1979. We need not reach the issue whether the Commissioner of Health has the authority to promulgate a regulation in order to retroactively readjust rates and recoup the excess over the actual cost of operating a skilled nursing facility. All concur, except Hancock, Jr., J., who dissents and votes to reverse and dismiss the petition, in the following memorandum.