Long Island College Hosp. v. Axelrod
| Decision Date | 03 July 1986 |
| Citation | 118 A.D.2d 177,504 N.Y.S.2d 275 |
| Parties | LONG ISLAND COLLEGE HOSPITAL, Respondent, v. David AXELROD, as Commissioner of Health of the State of New York, et al., Appellants. |
| Court | New York Supreme Court — Appellate Division |
Robert Abrams, Atty. Gen. (Clifford A. Royael, of counsel), Albany, for appellants.
Proskauer, Rose, Goetz & Mendelsohn (Larry M. Lavinsky, of counsel), New York City, for respondent.
Before MAHONEY, P.J., and MAIN, MIKOLL, YESAWICH and LEVINE, JJ.
Defendant Commissioner of Health, pursuant to Public Health Law § 2807(3), establishes reimbursement rates for Medicaid. The calculation of these rates is based on an analysis of actual costs during a given base period and projections of changes in these costs during a subsequent period. A hospital's allowable base year operating costs are multiplied by a "trend factor". * The purpose of the trend factor is to account for allowable cost increases between the base year and the rate year. The trend factor includes a component for projected labor cost increases and is based, inter alia, on national employment cost indices published on a quarterly basis by the United States Department of Labor. Reimbursement rates, however, may be based upon a facility's actual projected labor cost increase instead of national indices if the facility can demonstrate that it cannot afford the increased labor costs resulting from a labor agreement. This rate adjustment is known as the supplement hospital index factor (SHIF) and is granted pursuant to 10 NYCRR 86-1.17(a)(5). SHIF is a waiver of the trend factor and involves replacing the average labor cost component of the trend factor with a component reflecting a facility's projected labor cost increases. The criteria for granting SHIF include a demonstration by the facility that it cannot afford, either in whole or in part, increases in employee compensation or benefits resulting from a labor agreement.
In July 1980, the League of Voluntary Homes and Hospitals of New York (League), a collective bargaining association of a majority of the unionized hospitals in New York City, negotiated a two-year contract with District 1199, National Union of Hospital and Health Care Employees (District 1199), the principal union for New York City health care workers. Shortly thereafter, the Department of Health entered into a memorandum of agreement (Agreement) with the League. Pursuant to the Agreement, the Department agreed to accept as reasonable the labor cost increases in the League's new contract with District 1199 and agreed to make additional reimbursement available to League hospitals to cover wage increases by employing SHIF. While League hospitals were thus presumed eligible for SHIF, non-League hospitals had to demonstrate a need therefor. Further, the Agreement provided that SHIF would be calculated for League hospitals by increasing employee compensation by a 45% roll-up. No similar provision was set for the SHIF calculation for non-League hospitals.
On October 8, 1980, plaintiff, a not-for-profit voluntary hospital located in Brooklyn, entered into a collective bargaining agreement, retroactive to July 1, 1980, with District 1199. The contract provided for increases in wages and benefits for plaintiff's employees which would bring them up to the levels reflected in the July 1980 master contract between the League and District 1199. Plaintiff joined the League in November 1980 and requested the Department to apply SHIF to its reimbursement calculation to cover plaintiff's parity costs and wage increases. The Department found that plaintiff was eligible for SHIF but failed to apply the 45% roll-up to plaintiff's reimbursement calculation since plaintiff had chosen to increase its employee compensation at a rate greater than industry norms. Accordingly, the Department ruled that any increase in such norms had to be phased in over a three-year period.
Plaintiff requested an administrative hearing pursuant to 10 NYCRR 86-1.17(c)(1). The request was denied by the Department's rate review officer on the ground that there were no issues of fact. On September 13, 1984, plaintiff commenced this declaratory judgment action against, among others, the Commissioner seeking declarations that the Department's failure to utilize the two-year phase-in of parity costs and to apply the 45% roll-up to plaintiff's reimbursement rate calculation violated its rights under State and Federal law. On February 1, 1985, defendants moved for an order converting this action into a CPLR article 78 proceeding and granting judgment dismissing the petition or, in the alternative, for summary judgment in favor of defendants. Special Term denied defendants' motion in its entirety. This appeal by defendants ensued.
Defendants contend that the disputed reimbursement rate was just and reasonable and argue that plaintiff failed to prove that the rate determination was arbitrary and capricious and, accordingly, that summary judgment dismissing the complaint should have been granted. We disagree.
A party is entitled to summary relief only if the court determines that, based upon the proof presented, no genuine issue of fact exists to establish the defendant's liability to the plaintiff (Andre v. Pomeroy, 35 N.Y.2d 361, 364, 362 N.Y.S.2d 131, 320 N.E.2d 853). Next, if, on the record before the court, it cannot be determined that there are no issues of material fact, the motion must be denied (see, Udoff v. Zipf, 44 N.Y.2d 117, 122, 404 N.Y.S.2d 332, 375 N.E.2d 392). Here, there are disputed issues of material fact arising from plaintiff's parity claim. The parties disagree about plaintiff's actual phase-in schedule. Plaintiff seriously challenges the Department's decision to utilize an artificial three-year phase-in of the parity increase in the reimbursement rate calculation. Plaintiff insists that it phased in most of its parity costs over two years and defendants assert that plaintiff's phase-in time of such costs exceeded industry norms. However, defendants have failed to present any evidence of the "industry norms" by which they evaluated plaintiff's phase-in of such costs....
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