Opinion
# 2012-040-024 Motion No. M-80914
04-24-2012
EASTCHESTER REHAB & HEALTH CARE v. STATE OF NEW YORK
Synopsis
Motion to file a claim late pursuant to CCA § 10(6) denied. Lack of appearance of merit as Movant seeking to overturn a determination of the Department of Health. Case information
UID: 2012-040-024 EASTCHESTER REHABILITATION AND Claimant(s): HEALTH CARE CENTER, LLC Claimant short name: EASTCHESTER REHAB & HEALTH CARE Footnote (claimant name) : Defendant(s): STATE OF NEW YORK Footnote (defendant name) : Third-party claimant(s): Third-party defendant(s): Claim number(s): NONE Motion number(s): M-80914 Cross-motion number(s): Judge: CHRISTOPHER J. McCARTHY HAMBURGER, MAXSON, YAFFE, KNAUER & McNALLY, LLP Claimant's attorney: By: David N. Yaffe, Esq. William P. Caffrey, Jr., Esq. ERIC T. SCHNEIDERMAN Defendant's attorney: Attorney General of the State of New York By: Thomas R. Monjeau, Esq., AAG Third-party defendant's attorney: Signature date: April 24, 2012 City: Albany Comments: Official citation: Appellate results: See also (multicaptioned case) Decision
For the reasons set forth below, the application of Movant, Eastchester Rehabilitation and Health Care Center, LLC (hereinafter "Movant" or "Eastchester"), to serve and file a late Claim pursuant to Court of Claims Act § 10(6) is denied.
Attached to the affidavit of Jerome Weinstock, Movant's Controller, submitted in support of Movant's motion, as Exhibit A is a copy of Movant's proposed Claim. The proposed Claim alleges that Movant owns and operates a New York State licensed Residential Health Care Facility that provides skilled nursing care to a general population of nursing home residents with a variety of care needs (proposed Claim, ¶ 9).
Pursuant to Public Health Law (hereinafter "PHL") § 2807-d(1),nursing home facilities such as Eastchester are "charged assessments on their gross receipts received from all patient care services and other operating income, less personal needs allowance and refunds, on a cash basis [in the] percentage amounts and for the periods specified …" (id., ¶ 10).
By its terms, the section applies to "Hospitals." However, the term "hospital" is defined by PHL § 2801 to include residential health care facilities, including nursing homes.
PHL § 2807-d(7) authorizes the New York State Department of Health ("DOH") to recoup assessments due and owing by withholding amounts from any payments to be made to the facility by the State. In other words, in the event that payments are not submitted by the facility, DOH collects the gross receipts assessments, together with interest and penalties, by withholding amounts from facilities' Medicaid reimbursements. The assessments are calculated based upon monthly cash receipts reports which all facilities are required to submit within 15 days after the end of each month. The actual calculation formula for residential health care facilities is set forth at PHL § 2807-d(2)(b) (id., ¶¶ 11-13).
The proposed Claim also asserts, upon information and belief, that if DOH has not received the reports from a facility, it estimates the assessment based upon the highest-earning month for which a report has been filed, i.e., the estimate imposes the highest possible assessment (id., ¶ 14).
By statement dated June 15, 2006, DOH imposed total assessments against Eastchester, inclusive of interest and penalties, of $415,347.10, for the months November 2003, January 2005 and February 2005. According to the statement, the assessment for all three months was estimated rather than actual. DOH began recouping this amount by recouping $33,055.67 from Movant on September 18, 2006 by withholding that amount from Medicaid payments to Movant, and completed recoupment through further withholdings from weekly Medicaid payments to Eastchester as of January 1, 2007 (id., ¶¶ 15-17).
By statement dated August 1, 2006, DOH imposed total assessments against Eastchester, inclusive of interest and penalties, in the amount of $1,651,751.39, for the months of March 2005 through February 2006. The assessment for all 12 months was estimated rather than actual. DOH began recouping this amount by recouping $36,360.76 from Movant on January 8, 2007 by withholding that amount from weekly Medicaid payments due to Movant, and completed recoupment via further withholdings on a weekly basis as of September 29, 2008 (id., ¶¶ 18-20).
By cover letter dated June 1, 2007 and sent to the DOH Division of Health Care Financing by overnight delivery, Eastchester submitted all monthly cash receipts reports through December 2006 which were purportedly not previously received by DOH. According to Movant, as of June 2, 2007, DOH was in position to calculate Eastchester's actual assessments due for the months in question which had previously only been estimated. Movant's reports reflected significantly lower cash receipts - and hence lower assessments due and correspondingly lower interest and penalties - for all the months in question.
With respect to the June 15, 2006 statement, Movant's monthly reports reflect a total amount due and owing for November 2003, January 2005 and February 2005 of $263,334.60, inclusive of interest and penalties. However, DOH recouped the full amount billed in the statement based upon its estimated assessments of $415,812.50. Eastchester asserts that, with respect to the June 15, 2006 statement, Movant has been overcharged by DOH in the amount of $151,812.50 (id., ¶¶ 21-26).
With respect to the August 1, 2006 statement, Movant's monthly reports reflect a total amount due and owing for March 2005 through February 2006 of $1,140,917.27, inclusive of interest and penalties. Eastchester asserts, upon information and belief, DOH recouped the full amount billed in the statement based upon its estimated assessments of $1,651,751.39. Movant asserts that, with respect to the August 1, 2006 statement, it has been overcharged by DOH in the amount of $510,834.12 (id., ¶¶ 28-31).
Movant asserts that, in addition to the amounts billed per the June 15, 2006 and August 1, 2006 statements, in November 2008, DOH imposed two additional unexplained recoupment amounts against it (id., ¶ 33).
On or about November 17, 2008, DOH imposed a recoupment amount of $26,320.16, purportedly attributable to the period from April 2002 through December 2002. This amount was recouped via withholding on November 24, 2008. Eastchester asserts that, according to DOH records, recoupment for that period had previously been fully completed as of May 16, 2005 (id., ¶ 34).
On or about November 24, 2008, DOH imposed an amount of $68,871.00, purportedly attributable to the period from January 2003 through February 2005. This amount was recouped via three withholdings in the amount of $30,441.74 on December 1, 2008, $30,265.42 on December 8, 2008 and $163.84 on December 15, 2008. Eastchester asserts that, according to DOH records, recoupment for that period had previously been fully completed as of January 1, 2007 (id., ¶ 36).
Eastchester asserts that DOH has failed to refund or credit it for the overpayment of $757,837.38 in total cash receipts assessments represented by the difference between the estimated assessments which the DOH recouped from Eastchester and the actual assessments which were rightfully due and owing based upon Eastchester's monthly cash receipts reports (id., ¶¶ 38-39).
The proposed Claim alleges that the State benefitted from the receipt of these excess monies, has no legal authority to retain these excess monies, has been unjustly enriched by the collection and retention of these excess monies, and, in equity and good conscience, should not be permitted to retain these excess monies, and asserts causes of action against the State for: (1) monies had and received; (2) unjust enrichment; and (3) restitution (id., ¶¶ 40-41).
Pursuant to Court of Claims Act § 10(6), it is within the Court's discretion to allow the filing of a late claim if the applicable statute of limitations set forth in Article 2 of the CPLR has not expired. Thus, the first issue for determination upon any late claim motion is whether the application is timely. The proposed Claim asserts causes of action for money had and received, unjust enrichment and restitution.The theory of unjust enrichment is a quasi-contract or implied-in-law contract cause of action (Goldman v Metropolitan Life Ins. Co., 5 NY3d 561, 572 [2005]). A cause of action for money had and received is also a contract implied in law (Parsa v State of New York, 64 NY2d 143, 148 [1984]). The statute of limitations on a contract cause of action is six years (CPLR § 213[2]). Movant asserts that the earliest date its causes of action accrued is June 15, 2006. Thus, the statute of limitations for breach of implied contract has not yet expired. Court of Claims Act § 9(2) gives this Court jurisdiction to determine claims for "breach of contract, express or implied" (Parsa v State of New York, supra at 149).
Restitution is the remedy for unjust enrichment. It is not a separate basis for liability. A party that establishes a prima facie claim for unjust enrichment is entitled to restitution (New York City Economic Dev. Corp v T.C. Foods Import & Export Co., Inc., 11 Misc 3d 1087[A], Sup Ct, Queens County 2006).
Next, in determining whether to grant a motion to file a late claim, Court of Claims Act § 10(6) sets forth six factors that should be considered, although other factors deemed relevant also may be taken into account (Plate v State of New York, 92 Misc 2d 1033, 1036 [Ct Cl 1978]). Movant need not satisfy every statutory element (see Bay Terrace Coop. Section IV v New York State Employees' Retirement Sys. Policemen's & Firemen's Retirement Sys., 55 NY2d 979, 981 [1982]). However, the burden rests with Movant to persuade the Court to grant his or her late claim motion (see Matter of Flannery v State of New York, 91 Misc 2d 797 [Ct Cl 1977]; Matter of Santana v New York State Thruway Auth., 92 Misc 2d 1 [Ct Cl 1977]).
Perhaps the most important factor to be considered is whether the proposed Claim has the appearance of merit, for it would be futile to permit a defective claim to be filed, subject to dismissal, even if other factors tended to favor the request (Ortiz v State of New York, 78 AD3d 1314, 1314 [3d Dept 2010], lv granted 16 NY3d 703 [2011], affd sub nom. Donald v State of New York, 17 NY3d 389 [2011], quoting Savino v State of New York, 199 AD2d 254, 255 [2d Dept 1993]). It is Movant's burden to show that the claim is not patently groundless, frivolous or legally defective, and, based upon the entire record, including the proposed claim and any affidavits, that there is reasonable cause to believe that a valid cause of action exists. While this standard clearly places a heavier burden upon a party who has filed late than upon one whose claim is timely, it does not, and should not, require Movant to establish definitively the merit of the claim, or overcome all legal objections thereto, before the Court will permit Movant to file a late claim (Matter of Santana v New York State Thruway Auth., 92 Misc 2d 1, supra at 11-12).
Here, Movant asserts, in its proposed Claim, that the State has failed to refund or credit Eastchester for the overpayment of assessments that DOH recouped from Eastchester (proposed Claim, ¶ 38). "As a court of limited jurisdiction, the Court of Claims has no jurisdiction to grant strictly equitable relief" (Madura v State of New York, 12 AD3d 759, 760 [3d Dept 2004], lv denied 4 NY3d 704 [2005], citing to Ozanam Hall of Queens Nursing Home v State of New York, 241 AD2d 670, 671 [3d Dept 1997]; see also Psaty v Duryea, 306 NY 413, 416 [1954]).
Therefore, as the Appellate Division, Fourth Department, stated in Green v State of New York (90 AD3d 1577, 1578 [2011], lv denied 18 NY3d 901 [2012]):
In determining whether the Court of Claims has subject matter jurisdiction over a claim, the initial question is "[w]hether the essential nature of the claim is to recover money, or whether the monetary relief is incidental to the primary claim" (Matter of Gross v Perales, 72 NY2d 231, 236 [1988], rearg denied 72 NY2d 1042 [1988]; see Buonanotte v New York State Off. of Alcoholism & Substance Abuse Servs., 60 AD3d 1142, [1143] [(3d Dept) 2009], lv denied 12 NY3d 712 [2009]; Sarbo IX v State of N.Y., Off. of Gen. Servs., 229 AD2d 910, 911 [(4th Dept) 1996]. Regardless of how a claim is characterized, one that requires, as a threshold matter, the review of an administrative agency's determination falls outside the subject matter jurisdiction of the Court of Claims (see Gross, 72 NY2d at 236; Buonanotte, 60 AD3d at 1143-1144; Matter of Salahuddin v Connell, 53 AD3d 898, 899 [(3d Dept) 2008]).
In order for Movant to recover damages on its asserted causes of action, the Court would have to examine and reverse DOH's administrative actions in determining the amount of the Medicaid recoupment. The jurisdiction of the Court of Claims is limited to awarding damages in tort or contract and does not extend to the review of discretionary determinations of State agencies (Lantry v State of New York, Ct Cl, Claim Nos. 102258, 102455, Motion Nos. M-62951, CM-63167, June 28, 2001, Read, J. [2001-001-027]). "If the award of a money judgment must be preceded by overturning and annulling a determination of an administrative agency then the primary relief sought is not money damages" (Ouziel v State of New York, 174 Misc 2d 900, 905 [Ct Cl 1997]).
The Court concludes that the proposed Claim is beyond the subject matter jurisdiction of the Court of Claims as the primary relief sought is the reversal of DOH's determination regarding recoupment of Medicaid payments. The Court concludes that Movant's proper remedy is an Article 78 proceeding in Supreme Court (Harvard Financial Services, Inc. v State of New York, 266 AD2d 685, 685 [3d Dept 1999]; see Sprain Brook Manor Nursing Home, LLC v New York State Department of Health, 2010 NY Slip Op 33413[U], 2010 WL 5151610 [Sup Ct, Albany County 2010]).
Thus, the Court concludes that the proposed Claim lacks the appearance of merit. Because it would be futile to permit a defective claim to be filed, subject to dismissal, even if other factors tended to favor the request, Movant's motion is denied.
April 24, 2012
Albany, New York
CHRISTOPHER J. McCARTHY
Judge of the Court of Claims
The following papers were read and considered by the Court on Movant's motion for permission to serve and file a claim late:
Papers Numbered
Notice of Motion, Affidavit in Support,
Exhibits attached & Memorandum of Law 1
Affirmation in Opposition
& Exhibits attached 2
Supplemental Affirmation in Opposition 3
Reply Affirmation in Support 4