Seittelman v. Sabol

• Decision Date: 02 April 1998
• Citation: 697 N.E.2d 154,91 N.Y.2d 618,674 N.Y.S.2d 253
• Parties: , 697 N.E.2d 154, 1998 N.Y. Slip Op. 3018 Estelle SEITTELMAN, as Administratrix of the Estate of Ida Zichlinsky, Deceased, et al., on Behalf of Themselves and All Others Similarly Situated, Respondents, and Leah Silverman, et al., Intervenors-Respondents, v. Barbara J. SABOL, as Administrator of the New York City Human Resources Administration, et al., Appellants.
• Court: New York Court of Appeals Court of Appeals

Page 253

674 N.Y.S.2d 253

91 N.Y.2d 618, 697 N.E.2d 154, 1998

N.Y. Slip Op. 3018

Estelle SEITTELMAN, as Administratrix of the Estate of Ida Zichlinsky, Deceased, et al., on Behalf of Themselves and All Others Similarly Situated, Respondents and Leah Silverman, et al., Intervenors-Respondents, v. Barbara J. SABOL, as Administrator of the New York City Human Resources Administration, et al., Appellants.

Court of Appeals of New York.

April 2, 1998.

Jeffrey D. Friedlander, Acting Corporation Counsel of New York City (Cheryl Payer and Stephen J. McGrath, of counsel), for Barbara J. Sabol, appellant.

Dennis C. Vacco, Attorney General, New York City (John W. McConnell, Barbara G. Billet, Peter H. Schiff, Robert A. Forte and Kathleen P. Murray, of counsel), for Mary Jo Bane, appellant.

Scott A. Rosenberg, Helaine Barnett, Kathleen Kelleher, Yisroel Schulman and Constance Carden, New York City, for respondents and intervenors-respondents.

OPINION OF THE COURT

SMITH, Judge.

The primary issue presented by this appeal is whether defendants by regulation may limit Medicaid reimbursement for expenses incurred by eligible individuals during the three-month period preceding the application for Medicaid to only those services rendered by Medicaid-enrolled providers. We hold that such a State regulatory limitation is unsupported by the language or policy of the Federal statute. It is neither rational nor reasonable and is thus unenforceable. We also hold that the recipients may be reimbursed only at the Medicaid rate in existence at the time the service was rendered and may not be reimbursed for all out-of-pocket costs.

Plaintiff Estelle Seittelman, as administrator of the estate of Ida Zichlinsky, commenced this combined declaratory judgment and CPLR article 78 proceeding against the Department of Social Services (DSS) and the Commissioner of the New York City Human Resources Administration challenging the Department's refusal to reimburse Ms. Zichlinsky for monies expended for home care services she required during the three-month preapplication period. Pursuant to a promulgated regulation, DSS denied payment on the ground that Ms. Zichlinsky's medical services were obtained from a non-Medicaid-enrolled provider. Three other individuals were allowed to intervene as plaintiffs. Sadye Bass and Leah Silverman sought reimbursement for private home care services, and Marguerite Holohan sought reimbursement for nursing care required after undergoing surgery. All asserted that the denial of payments and the regulation that authorized them were irrational.

Before Supreme Court, plaintiffs moved to convert the action to a class action and for summary judgment declaring the regulation null and void. Defendants opposed the class certification and cross-moved for summary judgment. Supreme Court granted class wide relief and held that the regulation at issue was irrational, inconsistent with Federal law and, thus, null and void (Seittelman v. Sabol, 158 Misc.2d 498, 502-507, 601 N.Y.S.2d 391). The Appellate Division concurred that the regulation limiting retroactive reimbursement only to enrolled providers was irrational and that the State would be required to pay for those services rendered to eligible Medicaid recipients during the three-month preapplication period. However, it held that from the date of the actual application for Medicaid until the date when the Medicaid card was received, the State could limit reimbursement to expenses paid to enrolled providers "since, at the time of application, an applicant may be notified of the requirement that services be obtained from participating providers" (Seittelman v. Sabol, 217 A.D.2d 523, 525, 630 N.Y.S.2d 296). This Court granted defendants leave to appeal.

A.

Medicaid, a program administered by both the Federal Government and the individual States, serves to provide medical assistance to those individuals "whose income and resources are insufficient to meet the costs of necessary medical expenses" (42 U.S.C. § 1396; Wilder v. Virginia Hosp. Assn., 496 U.S. 498, 502, 110 S.Ct. 2510, 2513-14, 110 L.Ed.2d 455). In order to receive program funding from the Federal Government, New York's Medicaid plan must conform with the Federal statutory standards (see, Matter of Dumbleton v. Reed, 40 N.Y.2d 586, 587, 388 N.Y.S.2d 893, 357 N.E.2d 363). The Medicaid law currently requires that each State plan:

"provide that in the case of any individual who has been determined to be eligible for medical assistance under the plan, such assistance will be made available to him for care and services included under the plan and furnished in or after the third month before the month in which he made application * * * for such assistance if such individual was * * * eligible for such assistance at the time such care and services were furnished" (42 U.S.C. § 1396a[a][34]; see also, 42 C.F.R. 435.914[a] ).

Thus, pursuant to Federal law, New York must reimburse a Medicaid recipient for the cost of care and services received during the three months prior to the date on which the individual applied for Medicaid if that individual would have been eligible for Medicaid during those three months. This statutory directive was ostensibly adopted in New York in the form of a regulation, promulgated at 18 NYCRR 360-7.5(a)(5). Entitled "Method of payment for medical care," the regulation provides, in relevant part, that:

"(a) Payment for medical care provided under the [Medicaid] program will be made to the person or institution supplying the care. However, payment for services or care may be made, at the [Medicaid] rate or fee in effect at the time such services or care were provided, to the following: * * *

"(5) a recipient or his/her representative for paid medical bills for medical expenses incurred during the period beginning three months prior to the month of application for [Medicaid] and ending with the recipient's receipt of his/her [Medicaid] identification card, provided that the recipient was eligible in the month in which the medical care and services were received and that the medical care and services were furnished by a provider enrolled in the [Medicaid] program " (emphasis added).

It is the language highlighted above which forms the basis of the dispute currently before this Court. While the regulation provides the retroactive coverage envisioned and mandated by the Federal statute, it also limits that coverage by providing retroactive reimbursement only in those situations where "the medical care and services were furnished by a provider enrolled in the [Medicaid] program."

DSS proffers several arguments in support of the regulation's validity. The agency asserts that it is rational to interpret the Federal statute to mean that the retroactive eligibility provisions do little more than extend Medicaid coverage in accordance with the basic requirements of the Medicaid program, including the requirement that only services rendered by Medicaid-enrolled providers are reimbursable. DSS relies on the phrase "medical assistance under the plan" found in the Federal statute (see, 42 U.S.C. § 1396a [a][34] ), arguing that such phrase plainly means medical assistance furnished by providers within the Medicaid program. Similarly, the phrase "care and services included under the plan" can only refer to care and services provided under the auspices of the Medicaid program. DSS also points to the Federal implementing regulation which directs that Medicaid eligibility be made retroactive to the beginning of the three-month preapplication period only if the individual "[r]eceived Medicaid services, at any time during that period, of a type covered under the plan" (see, 42 C.F.R. 435.914[a][1] ). A "Medicaid service," argues DSS, can only be one that is obtained from a Medicaid-enrolled provider.

Next, DSS argues that the Federal provisions do not explicitly require a participating State to reimburse a Medicaid applicant for services provided by a non-Medicaid provider during the retroactive three-month preapplication period. In fact, asserts DSS, the Federal parity provision (42 U.S.C. § 1396a[a][10][B][i] ) mandates the rule articulated in the regulation because the regulation ensures that all Medicaid recipients receive care and services only from Medicaid-enrolled providers, whether those services are provided during the three-month preapplication period or during the regular eligibility period. Finally, DSS asserts that the State's ability to assure high quality services without fraud or waste would be severely impaired if such reimbursements were allowed because non-Medicaid-enrolled providers are not subject to programmatic checks and audits and may even have been suspended or excluded from the Medicaid program because of fraudulent or abusive practices. For all these reasons, DSS requests that this Court uphold the regulation's validity.

It is settled law that an agency's interpretation of the statutes it administers must be upheld absent demonstrated irrationality or unreasonableness (Matter of Howard v. Wyman, 28 N.Y.2d 434, 438, 322 N.Y.S.2d 683, 271 N.E.2d 528). However, where "the question is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent, there is little basis to rely on any special competence or expertise of the administrative agency" (Kurcsics v. Merchants Mut. Ins. Co., 49 N.Y.2d 451, 459, 426 N.Y.S.2d 454, 403 N.E.2d 159; Matter of New York Botanical Garden v. Board of Standards & Appeals, 91 N.Y.2d 413, 671 N.Y.S.2d 423, 694 N.E.2d 424). In such a case, courts are "free to ascertain the proper interpretation from the statutory language and legislative intent" (Matter of Gruber [New York City Dept. of Personnel--Sweeney], 89 N.Y.2d 225, 231-232, 652 N.Y.S.2d 589, 674 N.E.2d 1354; Matter of Dental Socy. v. Carey, 61 N.Y.2d 330, 335, 474 N.Y.S.2d 262, 462 N.E.2d 362 ["Whether administrative action violates applicable statu...