Opinion
15310 Index No. 452903/17 Case No. 2020–03525
02-15-2022
In the Matter of CITY OF NEW YORK et al., Petitioners–Appellants, v. CONTRACT DISPUTE RESOLUTION BOARD OF the CITY OF NEW YORK et al., Respondents–Respondents.
Georgia M. Pestana, Corporation Counsel, New York (Philip W. Young of counsel), for appellants. Frank Ng, New York, for Contract Dispute Resolution Board of the City of New York, respondent. Glaser & Weiner, P.C., Melville (Todd V. Lamb of counsel), for New York Health Care, Inc., respondent.
Georgia M. Pestana, Corporation Counsel, New York (Philip W. Young of counsel), for appellants.
Frank Ng, New York, for Contract Dispute Resolution Board of the City of New York, respondent.
Glaser & Weiner, P.C., Melville (Todd V. Lamb of counsel), for New York Health Care, Inc., respondent.
Kern, J.P., Oing, Singh, Moulton, Gonza´lez, JJ.
Judgment (denominated an order), Supreme Court, New York County (Nancy M. Bannon, J.), entered July 24, 2020, denying the petition seeking, among other things, to annul the determination of respondent Contract Dispute Resolution Board (CDRB), dated June 26, 2017, which found that petitioner Human Resources Administration (HRA) is not authorized to annually recoup unused funds paid to respondent New York Health Care, Inc. (NYHC) pursuant to the Health Care Reform Act (HCRA) ( Public Health Law § 2807–v ), and dismissing the proceeding brought pursuant to CPLR article 78, unanimously reversed, on the law, without costs, the proceeding reinstated and the petition granted.
The court dismissed the petition based on this Court's decision in Matter of People Care Inc. v. City of N.Y. Human Resources Admin. , in which we found that HRA had no authority under the HCRA or a contract with a service provider to audit or recoup HCRA funds, a decision which has been reversed on appeal ( 175 A.D.3d 134, 106 N.Y.S.3d 32 [1st Dept. 2019], revd 36 N.Y.3d 1088, 143 N.Y.S.3d 329, 167 N.E.3d 497 [2021], on remand 194 A.D.3d 624, 144 N.Y.S.3d 361 [1st Dept. 2021] ). The Court of Appeals adopted the reasoning of the dissenting opinion and concluded that "the funds for personal care services paid to petitioner ... under the [HCRA] ... are Medicaid funds subject to the audit and recoupment authority of ... [HRA] in accordance with the parties’ 2001 contract" ( 36 N.Y.3d at 1090, 143 N.Y.S.3d 329, 167 N.E.3d 497 [internal citation omitted]; accord Matter of New York Health Care, Inc. v. City of N.Y. Human Resources Admin., 201 A.D.3d 474, 156 N.Y.S.3d 834 [1st Dept. 2022] ). As the court noted in this proceeding, the contract between HRA and NYHC is nearly identical to the one in Matter of People Care.
In light of the decision by the Court of Appeals in Matter of People Care, CDRB's determination—that the HCRA only allows recoupment of funds spent on something other than recruitment or retention, and that the HCRA places no time limitation on the use of funds provided—was affected by an error of law ( CPLR 7803[3] ). The dissenting opinion in Matter of People Care found that "HCRA funds are merely a subset of the contractual Medicaid funds," and deferred to the interpretation of the New York State Department of Health (DOH) that HCRA funds are "subject to annual auditing and recoupment by [HRA]," since they are "subject to the same rules and procedures applicable to all other Medicaid funds, including the authority of HRA ... to audit and recoup excess HCRA funds paid to providers" ( 175 A.D.3d at 150, 152, 106 N.Y.S.3d 32 [Richter, J., dissenting] [internal quotation marks omitted]). DOH's Medicaid Chief Financial Officer, John Ulberg, proffered the same interpretation in this proceeding as he did in Matter of People Care, thus we defer to DOH's rational construction of the HCRA (see id. at 151–152, 106 N.Y.S.3d 32 ). Indeed, the annual auditing and recoupment of Medicaid funds left unspent during each fiscal year is in accordance with the parties’ 2001 contract ( Matter of People Care, 36 N.Y.3d at 1090, 143 N.Y.S.3d 329, 167 N.E.3d 497 ).