Glengariff Corp. v. Snook

Citation122 Misc.2d 784,471 N.Y.S.2d 973
CourtUnited States State Supreme Court (New York)
Decision Date04 January 1984
Parties, 4 Soc.Sec.Rep.Ser. 957, Medicare & Medicaid Guide P 33,605 GLENGARIFF CORPORATION, Plaintiff, v. Robert SNOOK and Margaret Snook, Defendants.
MEMORANDUM

BEATRICE S. BURSTEIN, Justice.

This case, apparently one of first impression, involves the scope of a Federal statute and regulation and a counterpart State regulation, each of which essentially requires that payments received from Medicaid by a provider of services shall be accepted as payment in full.

Plaintiff seeks summary judgment, pursuant to CPLR 3212, claiming there are no issues of fact, or, in the alternative, for an order dismissing defendants' affirmative defenses, pursuant to CPLR 3211(b), on the ground they have no merit. Defendants cross-move for an order, pursuant to CPLR 3025(b), granting them leave to amend their answer so as to assert the affirmative defense of payment, and based thereon, they seek an order dismissing plaintiff's complaint, pursuant to CPLR 3211(a)(5). Leave to amend is granted. The Court hereby deems the answer amended so as to include a seventh affirmative defense of payment, as set forth in the proposed amended answer contained in the cross-moving papers. The Court now considers whether either summary judgment or the dismissal defendants seek will lie.

The following facts are uncontroverted. Plaintiff operates a private licensed nursing home and, at all relevant times, was a participant in what is commonly known as the Medicaid program.

Defendant Margaret Snook is a patient in plaintiff's nursing home. Prior to her admittance, plaintiff's representative met with her son, defendant Robert Snook (hereinafter defendant). The representative avers, on personal knowledge, that defendant said he would prefer to pay more to have his mother in a private room rather than a semi-private room. At that time, defendant Margaret Snook was not receiving any public assistance. Three days later, on July 10, 1982, Margaret Snook entered the home as a private patient. On that date, defendant signed an agreement as "Sponsor", which provided, inter alia, that:

"1. The Glengariff Corporation hereby admits the Patient to the Facility. In consideration, the Patient and Sponsor agree to pay The Glengariff Corporation its basic charge for the basic facility services furnished (itemized in the following paragraph 2) at the current daily basic rate of $95.60 for a PRIVATE room, or at such increased basic rate that shall comply with paragraph 6 below.

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"Patient and Sponsor acknowledge and agree that the Glengariff Corporation is not obligated to accept Medicaid payments in lieu of the private payments from the Patient and Sponsor required hereunder unless and until (a) the Patient shall have been a patient in the Facility for a period of at least 18 months and (b) the Patient and Sponsor shall have paid in full all sums due The Glengariff Corporation hereunder from the Patient and Sponsor for all periods prior to the first actual receipt of such Medicaid payments and shall have performed in full all of the obligations under this agreement on their part to be performed during such periods. The Glengariff Corporation will credit against the sums due The Glengariff Corporation hereunder from the Patient and Sponsor any reimbursements actually received from Medicare for Facility services and items furnished by The Glengariff Corporation to the Patient...."

Defendant paid for the period July 10, 1982 through September 30, 1982. Then he ceased making payments. His security deposit was applied by plaintiff and therefore plaintiff was actually paid by defendant through November 24, 1982.

On October 8, 1982, defendant made application for Medicaid on his mother's behalf. Initially this was refused, apparently on the ground she was not in need of medical assistance because defendant had agreed to pay for her care. He appealed. Following a fair hearing, the denial was found improper, and the Nassau County Department of Social Services (DSS) was directed to provide assistance retroactive to November 24, 1982, the date when defendant's security payments were exhausted.

The Decision after Fair Hearing states that as defendant ceased making payments on the patient's behalf, and as he cannot be required to do so pursuant to the Social Services Law, his funds cannot be considered an available resource to the patient. The Decision further states that DSS can explore the feasibility of requiring defendant Margaret Snook to pursue "a third-party cause of action" against defendant on the basis that the agreement between plaintiff and defendant herein is a potentially available resource under "section 360.4(a)" presumably 18 NYCRR § 360.4(a). This regulation requires as a condition of eligibility, that a Medicaid recipient pursue any potential resource not currently available. Apparently no action was ever taken in that regard by DSS. The specific question before this Court now is whether defendant is still obligated on the agreement either for the difference between the sums the plaintiff received from Medicaid for the care of Margaret Snook and the amount defendant agreed to pay for her care for 18 months, or the entire amount (in which case plaintiff would reimburse Medicaid for its share).

Medicaid is a joint Federal-State grant-in-aid program, which was established pursuant to 42 U.S.C. §§ 1396 et seq. commonly known as the Federal Security Act. Mtr. of Westhampton Nursing Home v. Whalen, 67 A.D.2d 1017, 413 N.Y.S.2d 244, revd on other grnds, 60 N.Y.2d 711, 468 N.Y.S.2d 869, 456 N.E.2d 810. Through this cooperative venture, the Federal government supplies funds to state programs run in accord with federal requirements. Aitchison v. Berger, 404 F.Supp. 1137, 1141 (S.D.N.Y.1975). A privately owned and operated nursing home which provides services to persons eligible to receive Medicaid (such as plaintiff's) is reimbursed according to rates established by the New York State Department of Health pursuant to the procedure set forth in section 2807 of the Public Health Law. Hurlbut v. Whalen, 58 A.D.2d 311, 396 N.Y.S.2d 518 (4th Dept.1977). In order to receive the benefits of the Medicaid program, including reimbursements, plaintiff was required to sign a "Provider Agreement" with New York State [Matter of Westhampton Nursing Home v. Whalen, 67 A.D.2d 1017, 413 N.Y.S.2d 244, rev'd on other grnds, 60 N.Y.2d 711, 468 N.Y.S.2d 869, 456 N.E.2d 810, supra ] and, of course, generally is bound by various relevant statutes and regulations.

In opposition to plaintiff's motion for summary judgment, defendants rely upon certain of those statutes and regulations. They claim the agreement is void, as a matter of law, on the grounds it is contrary to Federal and State law and public policy, and that plaintiff's receipt of payment from Medicaid constitutes full payment beyond which it is not entitled to recover. One such statute is Public Health Law § 2805-f, which, in subdivision 4, essentially classifies the knowing and willful act of charging more for services provided a Medicaid recipient than is received from Medicaid as a class E felony. However, that subdivision did not become effective until the thirtieth day after July 22, 1982, L. 1982, c. 716 § 1. This was more than a month after plaintiff and defendant entered into the agreement at issue. Therefore, the statute does not specifically govern plaintiff's acts. Goldfarb v. Goldfarb, 86 A.D.2d 459, 450 N.Y.S.2d 212 (2d Dept.1982); Kinney v. Kinney, 48 A.D.2d 1002, 369 N.Y.S.2d 258 (4th Dept.1975); City of Troy Unit of Rennsselaer County Ch. of Civ. Serv. Employees Ass'n v. City of Troy, 36 A.D.2d 145, 147, 319 N.Y.S.2d 106, 369 N.Y.S.2d 258 affd 30 N.Y.2d 549, 330 N.Y.S.2d 611, 281 N.E.2d 555 (1972).

There is also a federal statute, set forth at 42 U.S.C. § 1396h(d)(2)(B), the relevant part of which became effective in 1977. It classifies the knowing and willful charging of money to others as a requirement for a Medicaid patient's continued stay in a nursing home as a felony, punishable by a fine of not more than $25,000 or imprisonment for not more than five years, or both. Thus, a nursing home operator who required monetary "supplements" from non-financially responsible relatives of patients for whom it received Medicaid reimbursement could be found guilty under the cited section. United States v. Zacher, 586 F.2d 912 (2d Cir.1978) (dicta ). A violation of this statute occurs whenever a provider of services charges in excess of rates established by the State. Smith v. Caggiano, 12 Mass.App. 41, 421 N.E.2d 473, 475 n. 4 (1981).

In addition, there are federal and state regulations which address the issue now before the Court. These regulations have the force of law [Matter of Bates v. Toia, 45 N.Y.2d 460, 410 N.Y.S.2d 265, 382 N.E.2d 1128 (1978); Matter of Berent, (Co. of Erie), 86 A.D.2d 764, 448 N.Y.S.2d 282 (4th Dept.1982); Matter of Fairchild v. Gretch, 80 A.D.2d 724, 437 N.Y.S.2d 146 (4th Dept.1981) ], and the federal regulation is binding upon the States [Flathead Health Center v. County of Flathead, 183 Mont. 211, 598 P.2d 1111, 1113 (1979) ].

"A State plan must provide that the Medicaid agency must limit participation in the Medicaid program to providers who accept, as payment in full, the amounts paid by the agency." 42 CFR § 447.15.

The State regulation, which is set forth at 18 NYCRR § 360.27, was enacted pursuant to Social Services Law § 34(3)(f), which requires the Commissioner of the Department of Social Services to establish regulations for the administration of public assistance and care within this State. It states, in relevant part:

"Each social services district shall require that payment of fees...

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5 cases
  • Hill v. Am. Family Mut. Ins. Co., Docket No. 36311
    • United States
    • United States State Supreme Court of Idaho
    • January 5, 2011
    ...N.E.2d 950, 953 (N.Y. 2001) (discussing whether a woman could agree to waive support from an ex-spouse), and Glengariff Corp. v. Snook, 471 N.Y.S.2d 973, 977-79 (N.Y. Sup. Ct. 1984) (refusing to enforce a contract to pay a medical provider more than what the provider could collect under a n......
  • Hill v. Am. Family Mut. Ins. Co.
    • United States
    • United States State Supreme Court of Idaho
    • January 5, 2011
    ...950, 953 (2001) (discussing whether a woman could agree to waive support from an ex-spouse), and Glengariff Corp. v. Snook, 122 Misc.2d 784, 471 N.Y.S.2d 973, 977–79 (N.Y.Sup.Ct.1984) (refusing to enforce a contract to pay a medical provider more than what the provider could collect under a......
  • Hill v. Am. Family Mut. Ins. Co., 36311.
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    • April 29, 2011
    ...953 (2001) (discussing whether a woman could agree to waive support from an ex-spouse), and [249 P.3d 823] Glengariff Corp. v. Snook, 122 Misc.2d 784, 471 N.Y.S.2d 973, 977–79 (N.Y.Sup.Ct.1984) (refusing to enforce a contract to pay a medical provider more than what the provider could colle......
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    • January 10, 2011
    ...law, which governs the Indenture, also allows contract parties to waive private statutory rights.8 Glengariff Corp. v. Snook, 122 Misc.2d 784, 471 N.Y.S.2d 973, 977 (N.Y.Sup.Ct.1984) (“The fact that there is a statute or regulation in conflict with the terms of the contract does not necessa......
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