Rye Psychiatric Hosp. Center, Inc. v. State

• Decision Date: 21 November 1991
• Citation: 576 N.Y.S.2d 449,177 A.D.2d 834
• Parties: In the Matter of RYE PSYCHIATRIC HOSPITAL CENTER, INC., Respondent, v. STATE of New York, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 449

576 N.Y.S.2d 449

177 A.D.2d 834

In the Matter of RYE PSYCHIATRIC HOSPITAL CENTER, INC., Respondent, v. STATE of New York, Appellant.

Supreme Court, Appellate Division Third Department.

Nov. 21, 1991.

Robert Abrams, Atty. Gen. (Michael S. Buskus, of counsel), Albany, for appellant.

Shanley & Fisher, P.C. (Charles D. Donohue Jr., of counsel), New York City, for respondent.

Before WEISS, J.P., and MIKOLL, YESAWICH, MERCURE and CREW, JJ.

MERCURE, Justice.

Appeal from an order of the Court of Claims (E. Margolis, J.), entered July 31, 1990, which granted claimant's application pursuant to Court of Claims Act § 10(6) for permission to file a late claim.

In June 1984, the Office of Mental Health (hereinafter OMH) promulgated 14 NYCRR 577.7(g), which established a "minimum utilization factor" for calculation of Medicaid reimbursement rates for private psychiatric hospitals. This factor was employed in calculating claimant's 1985 reimbursement rate, causing a substantial decrease in the funds otherwise payable to claimant. In August 1988, claimant commenced an action in Federal court seeking a declaration that 14 NYCRR 577.7(g) was contrary to the Boren Amendment to the Federal Medicaid Act (42 U.S.C. § 1396a[a][13][A] and a recalculation and adjustment of the amount of its Medicaid reimbursement for 1985 and subsequent years. The State asserted as an affirmative defense, inter alia, that the 11th Amendment of the US Constitution barred the claim for money damages. Claimant subsequently made application in the Court of Claims for permission to file a late claim seeking damages for rate years 1985 through 1988. The motion was denied without prejudice upon the ground that "the * * * proposed claim fail[ed] to state a cause of action in that it [sought] only the award of money damages without seeking determination of the underlying right to recover from the State". In April 1990, claimant made a further motion for permission to file a late claim, this time submitting a proposed claim alleging that the State breached express and implied contracts by underpaying claimant for its care of Medicaid patients in 1985. The State opposed the motion, contending that the Court of Claims lacked subject matter jurisdiction over the proposed claim and that the claim was time barred. The Court of Claims rejected the State's arguments and granted claimant's motion. The State now appeals.

We reverse. While there is no question that the Court of Claims has jurisdiction over claims against the State for breach of express and implied contracts (see, Court of Claims Act § 9[2], the claim asserted by claimant states no such cause of action. It is fundamental that a Medicaid provider has no property interest in or contract right to reimbursement at any specific rate or, for that matter, to continued participation in the Medicaid program at all (see, Matter of Kaye v. Whalen, 44 N.Y.2d 754, 755, 405 N.Y.S.2d 682, 376 N.E.2d 1327, appeal dismissed, 439 U.S. 922, 99 S.Ct. 303, 58 L.Ed.2d 315; Matter...