Matter of Richmond Ctr. for Rehabilitation & Specialty Healthcare v. McDonald

Summary

The Appellate Division, Third Department, affirmed dismissal of a combined CPLR article 78 proceeding and declaratory judgment action challenging Medicaid reimbursement-rate determinations by the New York State Department of Health. The court held that excluding the value of land from the capital reimbursement calculation was rational and consistent with applicable regulations, while the petitioner’s other rate and sales-tax challenges were untimely or barred for failure to exhaust administrative remedies.

Holdings

1. DOH's exclusion of the value of petitioner's acquired land from the Medicaid reimbursement-rate calculation was rational and was not arbitrary and capricious.
2. The agency's Medicaid rate-setting methodology was entitled to substantial judicial deference and could not be annulled absent a compelling showing that it was unreasonable and unsupported by evidence.
3. Petitioner's challenges to the 2013 and 2014 reimbursement rates were time-barred because they challenged the rate-setting methodology and were not commenced within four months after receipt of the initial rate computation sheets.
4. Petitioner's sales-tax challenges were properly dismissed because, whether characterized as methodological or computational, they were not timely pursued before DOH.

Questions Presented

1. Whether DOH acted arbitrarily or capriciously by excluding the value of land acquired by petitioner's for-profit facility from the Medicaid capital reimbursement-rate calculation.
2. Whether petitioner's challenges to the 2013 and 2014 reimbursement-rate methodology were time-barred because they were not commenced within four months after receipt of the initial rate computation sheets.
3. Whether petitioner's sales-tax reimbursement challenges were barred because petitioner failed to appeal to DOH within the 120-day period required by regulation.

Disposition

affirmed