SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
862
CA 12-02161
PRESENT: SCUDDER, P.J., PERADOTTO, CARNI, VALENTINO, AND WHALEN, JJ.
IN THE MATTER OF WOODSIDE MANOR NURSING HOME,
AVON NURSING HOME, THE BRIGHTONIAN, CONESUS
LAKE NURSING HOME, ELM MANOR NURSING HOME,
HORNELL NURSING HOME, HURLBUT NURSING HOME,
NEWARK MANOR NURSING HOME, PENFIELD PLACE,
SENECA NURSING AND REHABILITATION CENTER,
SHOREWOODS NURSING HOME AND WEDGEWOOD NURSING
HOME, PETITIONERS-RESPONDENTS,
V MEMORANDUM AND ORDER
NIRAV R. SHAH, M.D., COMMISSIONER OF HEALTH,
STATE OF NEW YORK, ROBERT L. MEGNA, DIRECTOR OF
BUDGET, STATE OF NEW YORK, OR THEIR SUCCESSORS,
RESPONDENTS-APPELLANTS.
ERIC T. SCHNEIDERMAN, ATTORNEY GENERAL, ALBANY (VICTOR PALADINO OF
COUNSEL), FOR RESPONDENTS-APPELLANTS.
HARTER SECREST & EMERY LLP, ROCHESTER (THOMAS G. SMITH OF COUNSEL),
FOR PETITIONERS-RESPONDENTS.
Appeal from a judgment (denominated order) of the Supreme Court,
Monroe County (William P. Polito, J.), entered June 28, 2012 in a
proceeding pursuant to CPLR article 78. The judgment granted the
petition in part by remitting the matter to the Department of Health
for further proceedings.
It is hereby ORDERED that the judgment so appealed from is
unanimously modified on the law by denying the petition in its
entirety and dismissing the proceeding and as modified the judgment is
affirmed without costs.
Memorandum: Petitioners are 12 residential health care
facilities, as defined in Public Health Law § 2801 (3), that
participate in the Medicaid program (see 42 USC § 1396 et seq.).
Pursuant to the Medicaid program, such facilities are entitled to
reimbursement for services that are provided to eligible Medicaid
recipients (see § 1396a et seq.). Each state participating in the
program is required to adopt a method for reimbursing such facilities
(see § 1396a [a] [13] [A]), as well as a procedure for providing
facilities such as petitioners with administrative review of the
payment rates (see 42 CFR 447.253 [e]). New York’s method of
determining the rates of payment and the administrative review
-2- 862
CA 12-02161
procedure are found in Public Health Law article 28 and 10 NYCRR part
86. Administrative challenges to rate determinations, also known as
“rate appeals” (10 NYCRR 86-2.13 [b]), are governed in particular by
Public Health Law § 2808 and 10 NYCRR 86-2.13 and 86-2.14.
Between the years 2000 and 2009, petitioners collectively filed
95 rate appeals with the New York State Department of Health (DOH).
At the time the appeals were filed, 10 NYCRR 86-2.14 (b) mandated that
the Commissioner of Health (Commissioner) act upon such appeals
“within one year of the end of the 120-day period” within which
facilities were obligated to file the rate appeal (see 10 NYCRR 86-
2.13 [a]).
In 2010, the legislature enacted Public Health Law § 2808 (17)
(b), which initially provided that, “for the state fiscal year
beginning April [1, 2010] and ending March [31, 2011], the
[C]ommissioner shall not be required to revise certified rates of
payment established pursuant to [article 28] for rate periods prior to
April [1, 2011], based on consideration of rate appeals filed by
residential health care facilities . . . in excess of an aggregate
annual amount of [80] million dollars for such state fiscal year” (§
2808 former [17] [b]; see L 2010, ch 109, part B, § 30). In
determining which rate appeals would be subject to the moratorium and
which rate appeals would be processed pursuant to the statutory cap,
the Commissioner was to prioritize the appeals and, in doing so, was
to consider “which facilities . . . [were] facing significant
financial hardship” (§ 2808 [17] [b]).
In 2011, section 2808 (17) (b) was amended to expand the time
period of the rate appeal moratorium through March 31, 2015 and to
reduce the rate appeal cap to 50 million dollars for the fiscal year
April 1, 2011 through March 31, 2012 (see L 2011, ch 59, part H, §
98). In addition, section 2808 (17) (c) was added, which provided
that “for periods on and after April [1, 2011] the [C]ommissioner
shall promulgate regulations . . . establishing priorities and time
frames for processing rate appeals, including rate appeals filed prior
to April [1, 2011] . . . ; provided, however, that such regulations
shall not be inconsistent with the provisions of [subdivision (17)]
(b)” (see L 2011, ch 59, part H, § 98).
Respondents failed to act on any of the 95 rate appeals filed by
petitioners between 2000 and 2009. By letters dated September 13,
2011, each petitioner demanded that the DOH “immediately resolve the
[applicable] administrative rate appeals.” When no response was given
and no action was taken, petitioners commenced this CPLR article 78
mandamus proceeding seeking, inter alia, to compel respondents “to
immediately address and resolve [p]etitioners’ outstanding Medicaid
rate appeals.” Respondents moved to dismiss the petition, contending
that petitioners had failed to exhaust their administrative remedies
and that the proceeding was barred by the statute of limitations.
Respondents also contended that petitioners’ rate appeals were subject
to the moratorium established by Public Health Law § 2808 (17) (b) and
thus that petitioners were required to await an administrative
determination of their rate appeals before seeking judicial
-3- 862
CA 12-02161
intervention.
Supreme Court denied respondents’ motion and granted the petition
in part by remitting the matter to the DOH “to complete resolution of
the [rate] appeals in accordance with the laws in effect at the time
of filing.” The court concluded that section 2808 (17) (b) and (c)
did not apply retroactively to rate appeals filed before the
moratorium was enacted and thus that petitioners could properly seek
mandamus to compel compliance with the mandated laws requiring reviews
of rate appeals within a certain period of time. The court also
concluded that the proceeding was not barred by the statute of
limitations.
On appeal, respondents contend that, because section 2808 (17)
(b) and (c) apply to petitioners’ rate appeals, petitioners do not
have a clear legal right to compel respondents to process their rate
appeals. They therefore contend that mandamus does not lie and that
petitioners must exhaust their administrative remedies before seeking
judicial intervention. We note that respondents have not pursued in
their brief the issue raised in their motion papers that the petition
should be dismissed pursuant to the statute of limitations. We
therefore deem that issue abandoned (see Ciesinski v Town of Aurora,
202 AD2d 984, 984).
We agree with respondents that section 2808 (17) (b) and (c)
apply retroactively to petitioners’ rate appeals. The seminal case on
whether statutes are to be applied retroactively is Majewski v
Broadalbin-Perth Cent. Sch. Dist. (91 NY2d 577, 584), which provides,
in relevant part, that “[i]t is a fundamental canon of statutory
construction that retroactive operation is not favored by courts and
statutes will not be given such construction unless the language
expressly or by necessary implication requires it” (see generally
McKinney’s Cons Laws of NY, Book 1, Statutes § 51 [b]). We conclude
that the language of the statute requires that it be applied
retroactively. Public Health Law § 2808 (17) (b) states that, for the
period from April 1, 2010 through March 31, 2015, “the [C]ommissioner
shall not be required to revise certified rates of payment . . . for
rate periods prior to April [1, 2015], based on consideration of rate
appeals filed by residential health care facilities” in excess of the
monetary cap. While there is no explicit statement that the
moratorium and cap shall apply to rate appeals filed before April 1,
2010, the statute specifically states that no revisions are required
for any period before April 1, 2015 where the revision would emanate
from a rate appeal filed by a residential health care facility. In
our view, the necessary implication of that language is that the
statute applies to any rate appeal seeking a revision for any period
before April 1, 2015, including any revisions resulting from rate
appeals filed before the statute took effect.
Moreover, subdivision (17) (c), which was added in 2011,
specifically states that the Commissioner is required to promulgate
regulations establishing priorities and time frames “for processing
rate appeals, including rate appeals filed prior to April [1, 2011] .
. . ; provided, however, that such regulations shall not be
-4- 862
CA 12-02161
inconsistent with the provisions of [subdivision (17)] (b).” Even if
we were to conclude that subdivision (17) (c) does not explicitly
state that the statute applies to rate appeals filed before the
moratorium and cap took effect, the necessary implication is that the
moratorium and cap apply to all pending rate appeals inasmuch as there
would be no need to prioritize the handling of those appeals unless
they were encompassed by the moratorium and cap.
Even assuming, arguendo, that the language of the statute is
ambiguous, “we [would] turn to legislative history to steer our
analysis” (Majewski, 91 NY2d at 584). As noted, subdivision (17) (b)
was initially enacted to provide the moratorium and cap for a one-year
period: April 1, 2010 through March 31, 2011. The legislation was
part of a larger bill that was deemed “necessary to provide enhanced
fiscal management and generate savings for the 2010-11 State fiscal
year” (Governor’s Approval Mem, Bill Jacket, L 2010, ch 109 at 4).
The intent of the entire legislation was to “maintain continuity in
State services and financial management in the absence of an enacted
2010-11 Budget” and “to ensure the fiscal stability of the State”
(Senate Introducer Mem in Support, Bill Jacket, L 2010, ch 109 at 8-
9). Specifically, part B of the legislation, which included the
moratorium and cap contained in Public Health Law § 2808 (17) (b), was
deemed “necessary to achieve $270 million in savings in the 2010-11
State fiscal year” (id. at 8). In enacting the time-period extension
and adding subdivision (17) (c), the Governor stated that “[t]he bill
is necessary to enact the 2011-2012 State budget” (Governor’s Approval
Mem, Bill Jacket, L 2011, ch 59 at 8).
In our view, the intent of the 2010 and 2011 legislation was to
decrease costs in order to maintain the financial stability of the
State. If the statute were to apply only to rate appeals filed after
the moratorium and cap were imposed, then the goal of the statute
would not have been accomplished. There were approximately 7,500 rate
appeals pending as of January 2012. Had the Commissioner been
required to make revisions and payments on all of the rate appeals
pending at the time of the moratorium, there would have been little,
if any, savings. As unfair as it may appear to be to all those who
had appeals pending for years, we conclude that the statute was
intended to apply retroactively to all rate appeals, “including rate
appeals filed prior to April [1, 2011]” (Public Health Law § 2808 [17]
[c]).
Inasmuch as the moratorium applies retroactively to petitioners’
rate appeals, petitioners do not have a clear legal right to relief,
and their petition must be denied (see e.g. Matter of Urban Strategies
v Novello, 297 AD2d 745, 746; Matter of Jay Alexander Manor v Novello,
285 AD2d 951, 953, lv denied 97 NY2d 610; see generally Matter of
Scherbyn v Wayne-Finger Lakes Bd. of Coop. Educ. Servs., 77 NY2d 753,
757). We therefore modify the judgment by denying the petition in its
entirety and dismissing the proceeding.
Entered: October 4, 2013 Frances E. Cafarell
Clerk of the Court