Chase Manhattan Bank v. State

• Decision Date: 16 December 2004
• Docket Number: 96050.
• Citation: Chase Manhattan Bank v. State, 13 A.D.3d 873, 787 N.Y.S.2d 155, 2004 NY Slip Op 9362 (N.Y. App. Div. 2004)
• Parties: CHASE MANHATTAN BANK, Appellant, v. STATE OF NEW YORK, Respondent. (Claim No. 103886.)
• Court: New York Supreme Court — Appellate Division

13 A.D.3d 873

787 N.Y.S.2d 155

2004 NY Slip Op 09362

CHASE MANHATTAN BANK, Appellant, v.STATE OF NEW YORK, Respondent. (Claim No. 103886.)

96050.

Appellate Division of the Supreme Court of the State of New York, Third Department.

December 16, 2004.

Appeal from an order of the Court of Claims (Collins, J.), entered August 8, 2003, which, inter alia, granted defendant's cross motion for summary judgment dismissing the claim.

MUGGLIN, J.

Claimant alleges that it is the agent of U.S. HomeCare Corporation(hereinafter USHC) and other unsecured creditors of that now defunct corporation.USHC was a provider of personal care services under defendant's Medical Assistance Program (hereinafter Medicaid) and operated six licensed home health agencies which provided personal care services to Medicaid recipients pursuant to contracts with various local counties.Claimant admits that these contracts contained reimbursement rates for Medicaid patients in excess of rates charged to the general public, a violation of a regulation promulgated effective January 1, 1994 by the Department of Social Services(see18 NYCRR 505.14 [h][7][ii][a][1][i]).Thereafter, the Attorney General's Medicaid Fraud Control Unit (hereinafter MFCU) conducted an audit and investigation of Medicaid providers, including USHC, and, as part of that investigation, impaneled a grand jury which subpoenaed USHC's billing records for the period 1992 through 1997.To settle this matter, USHC and MFCU signed an agreement and settlement dated February 27, 1998 pursuant to which USHC agreed to repay $1.75 million of excess Medicaid payments.The repayment schedule, with interest, was complied with by USHC and claimant for approximately 2 1/2 years before claimant stopped paying.Claimant then commenced this action to recover the payments, asserting that defendant's unilateral imposition of the "public rate charge" was a breach of the contractual rates contained in USHC's contracts with the several counties in New York and that the settlement agreement is unenforceable as it was the product of duress.^*

Claimant moved for summary judgment on its breach of contract cause of action, and defendant cross-moved to dismiss the entire claim for failure to state a cause of action.The Court of Claims denied claimant's motion for summary judgment and granted the cross motion dismissing the claim.Claimant appeals, and we affirm.

In our view, claimant's breach of contract claim is inconsistent with the provisions of the settlement agreement and is, thus, no longer viable.An assertion that defendant breached the contracts between USHC and the various counties by unilaterally imposing a rate reduction is inconsistent with USHC's agreement to repay $1.75 million in Medicaid overpayments.We, therefore, first address whether the settlement agreement was the product of duress because it was entered into when a criminal investigation was being undertaken.We find no merit to this claim.A valid claim of duress has two components, (1) threats of an unlawful act by one party which (2) compels performance by the other party of an act which it had a legal right to abstain from performing (seeLyons v Lyons,289 AD2d 902, 904[2001], lv denied98 NY2d 601[2002];Matter of Garvin,210 AD2d 332, 333[1994]).MFCU had a lawful right to conduct a grand jury investigation, so the first element of duress is absent from this case(seeMatter of Rychlick v Coughlin,99 AD2d 863, 864[1984], affd63 NY2d 643[1984]).Moreover, USHC acted...