—Judgment unanimously reversed on the law with costs and petition dismissed. Memorandum: Petitioner failed to exhaust its administrative remedies with respect to the arguments set forth in its CPLR article 78 petition. Thus, Supreme Court lacked authority to consider those arguments (see, Matter of Nelson v Coughlin, 188 AD2d 1071, appeal dismissed 81 NY2d 834). Were we to reach the merits, we would agree with the determination of the Administrative Law Judge (see, Harr-Wood Nursing Home v Perales, 113 AD2d 535; see also, Rego Park Nursing Home v Perales, 206 AD2d 781). (Appeal from Judgment of Supreme Court, Erie County, Joslin, J.—Article 78.) Present—Pine, J. P., Balio, Callahan, Davis and Boehm, JJ.