SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
632
CA 12-01853
PRESENT: SCUDDER, P.J., PERADOTTO, LINDLEY, SCONIERS, AND WHALEN, JJ.
CANANDAIGUA EMERGENCY SQUAD, INC., PENFIELD
VOLUNTEER EMERGENCY AMBULANCE SERVICE, INC.,
NORTHEAST QUADRANT ADVANCED LIFE SUPPORT, INC.,
CHILI VOLUNTEER AMBULANCE SERVICE, INC., AND
VILLAGE OF MACEDON, PLAINTIFFS-APPELLANTS,
V MEMORANDUM AND ORDER
ROCHESTER AREA HEALTH MAINTENANCE ORGANIZATION,
INC., DOING BUSINESS AS PREFERRED CARE AND MVP
HEALTH CARE, INC., DEFENDANTS-RESPONDENTS.
SCICCHITANO & PINSKY, PLLC, SYRACUSE (BRADLEY M. PINSKY OF COUNSEL),
FOR PLAINTIFFS-APPELLANTS.
LECLAIR KORONA GIORDANO COLE LLP, ROCHESTER (LAURIE A. GIORDANO OF
COUNSEL), FOR DEFENDANTS-RESPONDENTS.
Appeal from an order of the Supreme Court, Monroe County (Matthew
A. Rosenbaum, J.), entered June 4, 2012. The order, among other
things, denied plaintiffs’ motion for partial summary judgment and
granted defendants’ cross motion for summary judgment.
It is hereby ORDERED that the order so appealed from is
unanimously modified on the law by denying those parts of defendants’
cross motion for summary judgment dismissing the sixth and seventh
causes of action against defendant Rochester Area Health Maintenance
Organization, Inc., doing business as Preferred Care, and for summary
judgment on the counterclaims and as modified the order is affirmed
without costs.
Memorandum: Plaintiffs are various entities that provide
emergency ambulance services to persons in and around Monroe County.
Rochester Area Health Maintenance Organization, Inc., doing business
as Preferred Care (defendant), served as a Medicare Advantage
Organization under Medicare Part C. For purposes of this appeal, it
is not disputed that defendant MVP Health Care, Inc. was entitled to
summary judgment dismissing the complaint and that only defendant has
a basis for asserting counterclaims. During the relevant time period,
defendant remitted payments to plaintiffs for services provided to
patients enrolled in the Medicare Advantage Plan administered by
defendant. Plaintiffs commenced this action in response to
defendant’s subsequent reduction of payments made in order to recoup
alleged overpayments made by defendant for services provided by
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CA 12-01853
plaintiffs during the years 2007 and 2008. Plaintiffs appeal from an
order that denied their motion for partial summary judgment on
liability and granted, as relevant to this appeal, that part of
defendants’ cross motion for summary judgment dismissing the complaint
against defendant and for summary judgment on the counterclaims. We
conclude that Supreme Court erred in granting those parts of
defendants’ cross motion for summary judgment dismissing the sixth and
seventh causes of action against defendant and for judgment on the
counterclaims. We therefore modify the order accordingly.
Addressing first the sixth cause of action, challenging
defendant’s right to recoup alleged overpayments, and the
counterclaims for recoupment, we conclude that there are issues of
fact whether defendant is entitled to recoup alleged overpayments made
to plaintiffs for services provided to patients covered by the
Medicare Advantage plan administered by defendant. We agree with
plaintiffs that the applicable Medicare fee schedule set a minimum
payment, but not a maximum payment, for the services that plaintiffs
provided (see 42 USC § 1395w-22 [a] [2] [A]). On the one hand, if
defendant had paid plaintiffs the minimum fees required by the
applicable Medicare fee schedule, then plaintiffs would not be
entitled to object to those payments as being insufficient (see 42 CFR
422.214 [a] [1]). On the other hand, however, while defendant paid
plaintiffs more than the minimum amount required by the fee schedule
for a period of time, defendants have failed to establish that
defendant is entitled as a matter of law to recoup any or all of those
funds from plaintiffs. Although the common law right of a
governmental agency to recoup erroneously distributed public funds is
well established (see e.g. Matter of Leirer v Caputo, 81 NY2d 455,
459-460; Matter of Westledge Nursing Home v Axelrod, 68 NY2d 862, 864-
865), that right does not necessarily extend to defendant, a private
entity managing public funds (see generally Leirer, 81 NY2d at 459-
460). Moreover, defendants have failed, on this record, to establish
that defendant has a legal basis or right to recoup alleged
overpayments made to plaintiffs. The court therefore erred in
granting those parts of defendants’ cross motion for summary judgment
dismissing the sixth cause of action against defendant and for summary
judgment on the counterclaims for recoupment.
We also agree with plaintiffs that the court erred in granting
that part of defendants’ cross motion with respect to the seventh
cause of action against defendant, for unjust enrichment. “ ‘A cause
of action for unjust enrichment requires a showing that (1) the
defendant was enriched, (2) at the expense of the plaintiff, and (3)
that it would be inequitable to permit the defendant to retain that
which is claimed by the plaintiff’ ” (Hayward Baker, Inc. v C.O.
Falter Constr. Corp., 104 AD3d 1253, 1255; see Paramount Film Distrib.
Corp. v State of New York, 30 NY2d 415, 421, remittitur amended 31
NY2d 678, rearg denied 31 NY2d 709, cert denied 414 US 829). “ ‘The
essence of such a cause of action is that one party is in possession
of money or property that rightly belongs to another’ ” (Hayward
Baker, Inc., 104 AD3d at 1255). There are issues of fact with respect
to whether defendant’s recoupment of funds previously paid to
plaintiffs constitutes unjust enrichment.
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We have examined plaintiffs’ remaining contentions and conclude
that they lack merit.
Entered: July 19, 2013 Frances E. Cafarell
Clerk of the Court