Wayne Ctr. for Nursing & Rehab., LLC v. Zucker

• Decision Date: 16 September 2021
• Docket Number: 531459, 531621
• Citation: 197 A.D.3d 1409,153 N.Y.S.3d 666
• Parties: In the Matter of WAYNE CENTER FOR NURSING AND REHABILITATION, LLC, et al., Appellants, v. Howard A. ZUCKER, as Commissioner of Health, et al., Respondents. (Proceeding No. 1.) In the Matter of Richmond Center for Rehabilitation and Specialty Healthcare et al., Appellants, v. Howard A. Zucker, as Commissioner of Health, et al., Respondents. (Proceeding No. 2.)
• Court: New York Supreme Court — Appellate Division

197 A.D.3d 1409

153 N.Y.S.3d 666

In the Matter of WAYNE CENTER FOR NURSING AND REHABILITATION, LLC, et al., Appellants,

v.Howard A. ZUCKER, as Commissioner of Health, et al., Respondents.

(Proceeding No. 1.)

In the Matter of Richmond Center for Rehabilitation and Specialty Healthcare et al., Appellants,

v.Howard A. Zucker, as Commissioner of Health, et al., Respondents.

(Proceeding No. 2.)

531459, 531621

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: August 18, 2021

Decided and Entered: September 16, 2021

Garfunkel Wild, PC, Great Neck (Jason Hsi of counsel), for appellants in proceeding No. 1.

Hinman Straub PC, Albany (David B. Morgen of counsel), for appellants in proceeding No. 2.

Letitia James, Attorney General, Albany (Kathleen M. Treasure of counsel), for respondents.

Before: Garry, P.J., Egan Jr., Lynch and Pritzker, JJ.

MEMORANDUM AND ORDER

Garry, P.J. Appeals from two judgments of the Supreme Court (McGrath, J.), entered May 12, 2020 and June 17, 2020 in Albany County, which, in two combined proceedings pursuant to CPLR article 78 and actions for declaratory judgment, granted respondents’ motions for summary judgment dismissing the amended petition/complaint in proceeding No. 1 and the petition/complaint in proceeding No. 2.

Petitioners in these two proceedings are specialty residential health care facilities that are licensed by respondent Department of Health (hereinafter DOH) and provide specialized care and treatment for certain types of patients. These appeals involve challenges to petitioners’ 2018 and 2019 per diem Medicaid reimbursement rates as established by DOH and respondent Commissioner of Health (see Public Health Law §§ 2807[3] ; 2808[3]). After petitioners commenced these two combined proceedings pursuant to CPLR article 78 and actions for declaratory judgment, respondents answered and moved for summary judgment on the declaratory judgment claims. Supreme Court, among other things, addressed the merits, granted respondents’ motions for summary judgment and dismissed the amended petition/complaint in proceeding No. 1 and the petition/complaint in proceeding No. 2. Petitioners appeal.

First, we will address some threshold issues.¹ Petitioners argue that the doctrines of collateral estoppel and stare decisis bar respondents from litigating or prevailing in these proceedings. "Collateral estoppel is a flexible doctrine that precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against that party or those in privity" ( Matter of Anonymous v. New York State Justice Ctr. for the Protection of People with Special Needs, 167 A.D.3d 113, 116, 89 N.Y.S.3d 346 [2018] [internal quotation marks and citations omitted]; accord Matter of Ingber, 189 A.D.3d 1933, 1936, 139 N.Y.S.3d 385 [2020] ). "To establish collateral estoppel, it must be shown that a decisive issue in the current action [or proceeding] is identical to an issue resolved in a prior action [or proceeding], and that there was a full and fair opportunity to litigate that issue in the prior [action or] proceeding" ( Wen Mei Lu v. Wen Ying Gamba, 158 A.D.3d 1032, 1035, 71 N.Y.S.3d 186 [2018] [citations omitted]).

Contrary to petitioners’ assertion that respondents are bound by the Department of Social Services’ 1996 administrative decision in Matter of Ramapo Manor Nursing Home (N.Y. Dept of Social Servs Admin Directive FH No. 2239398Y [Dec. 31, 1996]), even assuming that respondents were found to be in privity with that agency,² it does not appear that they had a full and fair opportunity to litigate (but see Kateri Residence v. Novello, 95 A.D.3d 619, 620, 945 N.Y.S.2d 9 [2012] [finding that DOH was collaterally estopped from relitigating by this same administrative decision], lv dismissed 20 N.Y.3d 1031, 960 N.Y.S.2d 344, 984 N.E.2d 319 [2013] ). Specifically, when the Department of Social Services was unsuccessful on the administrative appeal, there was no opportunity for that agency to challenge the decision of one of its own administrative law judges – who was acting as an extension of that agency's commissioner – through a CPLR article 78 proceeding (compare Matter of Beaudoin v. Toia, 45 N.Y.2d 343, 349, 408 N.Y.S.2d 417, 380 N.E.2d 246 [1978] ). Thus, no court would be able to address the interpretation of the applicable statutes and regulations, despite the courts being the most appropriate forum for such interpretation, thereby preventing a full and fair opportunity to litigate.

Petitioners further rely upon two First Department decisions in which respondents defended against similar rate reimbursement challenges (Matter of Bronx–Lebanon Highbridge Woodycrest Ctr. v. Daines, 147 A.D.3d 442, 442–43, 47 N.Y.S.3d 273 [2017] ; Kateri Residence v. Novello, 95 A.D.3d at 619–20, 945 N.Y.S.2d 9 ). Notably, however, "the doctrine of collateral estoppel does not apply to bar relitigation of a pure question of law" ( CitiMortgage, Inc. v. Ramirez, 192 A.D.3d 70, 72, 136 N.Y.S.3d 572 [2020] [internal quotation marks and citation omitted]; see American Home Assur. Co. v. International Ins. Co., 90 N.Y.2d 433, 440, 661 N.Y.S.2d 584, 684 N.E.2d 14 [1997] ). Thus, and particularly considering that collateral estoppel is a flexible doctrine, we do not find that Supreme Court erred in declining to apply that doctrine to bar respondents from litigating in the current proceedings.

"Stare decisis is the doctrine which holds that common-law decisions should stand as precedents for guidance in cases arising in the future and that a rule of law[,] once decided by a court, will generally be followed in subsequent cases presenting the same legal problem" ( Matter of State Farm Mut. Auto. Ins. Co. v. Fitzgerald, 25 N.Y.3d 799, 819, 16 N.Y.S.3d 796, 38 N.E.3d 325 [2015] [internal quotation marks and citations omitted]). Although trial courts are "bound by the doctrine of stare decisis to apply precedent established in another Department, [if] no relevant precedent [is] available from this Court or the Court of Appeals[,] ... this Court is not so bound; while we should accept the decisions of a sister [D]epartment as persuasive, we are free to reach a contrary result if we disagree with such [C]ourt's legal analysis" ( Shoback v. Broome Obstetrics & Gynecology, P.C., 184 A.D.3d 1000, 1001, 126 N.Y.S.3d 212 [2020] [internal quotation marks, citations and brackets omitted]). Therefore, we need not address the issue of whether Supreme Court was bound and constrained by the prior First Department decisions; we will instead consider that persuasive authority in rendering a determination upon the merits.

Turning to the merits, the calculation for basic Medicaid reimbursement rates is set forth in 10 NYCRR 86–2.10, where the rate is defined as "the aggregate governmental payment to facilities per patient day as defined in [ 10 NYCRR] 86–2.8, for the care of Medicaid payments which include a direct, indirect, noncomparable[, i.e., operating cost or non-capital components,] and capital component" ( 10 NYCRR 86–2.10 [a][6]; see 10 NYCRR 86–2.10 [a][7]). "A patient day is the unit of measure denoting lodging provided and services rendered to one patient between the census-taking hour on two successive days" ( 10 NYCRR 86–2.8 [a]). In essence, a facility's overall costs (operating cost and capital components) for a specified year (known as the base year) may be divided by that facility's total number of patient days in that base year to find a per-patient, per-day Medicaid rate known as the per diem rate (see e.g. 10 NYCRR 86–2.10 [c][4][iv]; see also Good Samaritan Hosp. Med. Ctr. Inc. v. New York State Dept. of Health, 45 Misc.3d 844, 848, 996 N.Y.S.2d 466 [Sup. Ct., Suffolk County 2014] ).

Also relevant to reimbursement calculations are "reserved bed patient days" (hereinafter RBDs). As defined by regulation, RBDs constitute a "unit of measure denoting an overnight stay away from the residential health care facility for which the patient, or patient's third-party payor, provides per diem reimbursement when the patient's absence is due to hospitalization or therapeutic leave" ( 10 NYCRR 86–2.8 [d]; see 18 NYCRR 505.9 [d][1]). The concept of RBDs was created to protect a patient's right to return to the room or facility that he or she called home prior to a hospitalization or other therapeutic leave of absence. Facilities receive payments for eligible RBDs for therapeutic leaves of absence at 95% of the Medicaid rate otherwise payable to the facility for services provided on behalf of the patient (see Public Health Law § 2808[25][b][i] ; 18 NYCRR 505.9 [d][2]), and payment for RBDs for a patient cannot exceed 10 days in any 12–month period (see Public Health Law § 2808[25][b][ii] ). The regulation states that RBDs "shall be computed separately from patient days" ( 10 NYCRR 86–2.8 [d]).

In 2006, the Legislature amended Public Health Law § 2808 to include the "rebasing law," which updated the base year for calculating the operating cost component to account for inflation; the new rates took effect on January 1, 2009 (see Public Health Law § 2808[2–b] ; Matter of North Gate Health Care Facility, LLC v. Zucker, 174 A.D.3d 1201, 1202, 104 N.Y.S.3d 785 [2019], lv denied 35 N.Y.3d 903, 2020 WL 2216196 [2020] ; L 2006, ch 109, § 1, part C, § 47). In 2012, in a change referred to as "statewide pricing," the base year was updated again, and a new reimbursement methodology was authorized for calculating the operating cost component of non-specialty nursing home rates (see Public Health Law § 2808[2–c] ; 10 NYCRR 86–2.40 [eff. Jan. 1, 2012]). The Legislature exempted specialty facilities from the statewide pricing and directed that their rates must reflect January 1, 2009 rates, adjusted for inflation (see Public Health Law § 2808[2–c][c] ); DOH regulations included such exemption for specialty facilities (see 10 NYCRR 86–2.40 [ad] [eff. Jan. 1, 2012]). Although DOH amended the...