New York State Supreme Court Bronx County Case # 2004 ...

New York State Supreme CourtBronx County

Case # 2004-08773St Vincent De Paul Residence v. Antonia C. Nocello, M.D.

NYSC.BC.2004-08773.R

NYSC.BC.2004-08773.R

FILED: NEW YORK COUNTY CLERK 04/20/2015 01:09 PM INDEX NO. 102836/2006

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8 7 7 3 - 2 0 0 4ST. VINCENT DE PAUL RESIDENCE

vs.ANTONIA 0 . NOVELLO. M.D. ETC

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RR2

BRONX COUNTY

FELONY

A porson who wiUully and unlawfully, removes, mutilates, destroys, conceals o r cb^iteraies a record ol this offics. is punishable by Imprisonment for five years.

8773-2004

HECTOR L. DIAZ Bronx County Clerk

APPLICATION FOR INDEX NUMBERPursuant to Section 8 0 18 (a) Civil Practice Law and Rules

F E E : $210.00

SUPREME

IN D E XIndex Ho: 8773-

m i )me.B3W M

fB.ea

.COURT: BRONX COUNTY

M e Tine User 3/1/04 4:05:53 Pfl FCHIfllfl

FULL TITLE OF ACTION OR PROCEEDING ( Please type or p r im )

ST. VINCENT DE PAUL RESIDENCE, A NOT-FOR PROFIT CORPORATION

Plaintiffvs.

ANTONIA C. NOVELLO, M.D., AS COMMISSIONER OF THE DEPARTMENT OF HEALTH OF THE STATE OF NEW YORK ) .AND ON BEHALF OF THE DEPARTMENT OF HEALTH OF THE STATE 0 & W NEW YORK AND CAROLE E STONE AS DIRECTOR OF THE BUDGET OF T THE STATE OF NEW YORK >

Defendant

Third Party ( i f applicable )

Application for Index Number filed by:

Is this action for a provisional remedy, no action pending?

El Plaintiff □ Defendant

□ Yes

Type of Action: □ Tort□ Contract ^Commercial□ Matrimonial□ Tax CertiorariQ Other {Please Indicat^

□ Motor Vehicle □ Other-Personal injury

O Contested □ Uncontested

For Plaintiff or Petitioner; Name:Address:Town Zip: Telephone Number:

LAW OFFICES OF DAVID BERNFELD 122 EAST 42ND STREET

SUITE 606 NEW YORK, NY 10168

Tel: 212-661-1661

For Defendant or Respondent: Name:___________Address:_________Town Zip:_______Telephone Number:

If you would like a receipt mailed to you, Please provide a self-addressed stamped envelope

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF ]THE BRONX------------------------------------------------------------------------ -XST, VINCENT de PAUL RESIDENCE, a Not-for Profit Corporation,

Plaintiff,

-against-

ANTONIA C. NOVELLO, M.D., as Commissioner of the Department of Health of the State of New York and on behalf of the Department of Health of the State of New York, and CAROLE E. STONE, as Director of the Budget of the State of New York,

Defendants.

TO THE ABOVE NAMED DEFENDANTS:

" filed:

Plaintiff designates Westchester County as the place of trial

SUMMONS The basis of the Venue Designated is Plaintiffs Residence Plaintiff rel ides at:

Intervale Avenue New York

YOU ARE HEREBY SUMMONED to answer the this action and to serve

a copy of your answer or, if the complaint is not served with this summons, to serve a notice of

appearance in this action on the Plaintiffs attorneys within twenty (20) days after the service of

this summons, exclusive of the day of service, or within thirty (30) days after service is complete

if this summons is not personally delivered to you within the State of New York, and in case of

your failure to appear or answer, judgment will be taken against you by default for the relief

demanded in the complaint.

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A

? 9.

Dated: February 25,2004New York, New York

The Law Offices of DAVID B. BERNFELD Attorneys for Plaintiff

tavid B. Bemfel 1 2 2 ^ s t 42" * Street,'Suite 606 New York, New York 10168 (212) 661-1661

Defendant's Address:

Department of HealthEmpire State Plaza - Coming TowerAlbany, New York 12237-0001

Division of the Budget State CapitolAlbany, New York 12224

■>/a t

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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF BRONX------------------------------------------------------------------------------------------------------------ X

ST. VINCENT de PAUL RESIDENCE, a Not-for Profit Corporation,

Plaintiff, Index No.

- against -VERIFIED COMPLAINT


Defendants.------------------------------------------------------------------------------------

Plaintiff, ST. VINCENT de PAUL RESIDENCE, aNot-for-Profit Corporation, by its

attorneys, THE LAW OFFICES OF DAVID B.BERNFELD, respectfully alleges, on information

and belief, as follows:

THE PARTIES

1. Plaintiff is, and at all times relevant hereto was, a residential health care facility

(“RHCF”) situated in the Bronx, New York, licensed by Defendant Commissioner of the

Department of Health and the former Commissioner of the Department of Health pursuant to

Article 28 of the Public Health Law of the State of New York.

2. Defendant Antonia C. Novello, M.D. is the Commissioner of the Department of

Health of the State of New York with her principal offices located in the City and County of

Albany, and, as such, she is responsible for carrying out the duties assigned by law to her, and to

the New York State Department of Health (“DOH”)-

V;

3. Defendant Carole E. Stone is the Director of the Budget of the State of New York

with her principal offices located in the City and County of Albany and as such she is

responsible, among other things, for approving Medicaid reimbursement rates to and for

residential health care facilities, as said rates are established by Defendant Commissioner of

Health.

4. Plaintiff has at all times relevant hereto participated in the Medical Assistance

(Medicaid) Program whereby, in exchange for extending nursing home and/or health related care

to sick and elderly patients eligible for Medicaid, Plaintiff is entitled to be reimbursed by the

State of New York, at proper rates established, certified and paid by the Defendant

Commissioner of Health (and the former Commissioner of the Department of Health), and

approved by the Defendant Director of the Budget.

SUMMARY OF THE ACTION

5. In this action. Plaintiff seeks, inter alia, (a) a declaration that Plaintiffs Medicaid

reimbursement rate promulgated by Defendants for rate year 2004 has been fixed at an

erroneously low per diem amount, and (b) a direction that Defendants recompute and correct

Plaintiffs rate to provide Plaintiff with the increased reimbursement rate it is entitled to receive

for rate year 2004. As will be shown, the improper rate currently fixed is a direct result of the

improper and unlawful application by defendants of various reimbursement components,

specifics of which are set forth in detail below.

The Medicaid Program

6. The Medicaid Program is a joint federal and state jprogram, the objective of which

is to provide medical care to those who would otherwise be unable to afford such care. The

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Medicaid Program was established pursuant to Title XIX of the Social Security Act, 42 U.S.C.

§ 1396a et seq.

7. A State’s participation in the federal Medicaid program is voluntary. In order to

participate, a State must comply with various requirements imposed by the Medicaid Statute and

all regulations promulgated thereunder, including the requirement that it submit to the federal

Centers for Medicare & Medicaid Services (“CMS”) (formerly known as the Health Care

Financing Administration, or “HCFA”) a plan for medical assistance which sets forth its

methodology for compensating providers, and justifications for the proposed rates for the

medical assistance they render to Medicaid recipients.

8. Pursuant to Article 28 of the Public Health Law, the DOH is responsible for

setting Medicaid reimbursement rates for facilities such as Plaintiff. DOH’s “methodology” for

the computation of Medicaid reimbursement rates for residential health care facilities is set forth

in Article 28 of the Public Health Law and Subpart 86-2 of the Health Commissioner’s

Administrative Rules and Regulations (10 NYCRR 86).

9. In 1986, New York adopted a new Medicaid reimbursement Plan, prospective in

nature, based on historic costs, with inflation adjustments thereto (the “1986 Plan”). Under the

New York Medicaid Rate Plan for RHCFs, each facility is required to be notified of its Medicaid

reimbursement rate approximately 60 days prior to the rate period, i.e., facilities are notified in or

about early November of their rates for the next rate year which runs from January 1 through

December 31. The prospective nature and notification of a rate is independently mandated by

State statute and is part of New York State’s Medicaid Methodology Plan.

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10. As required by federal law, the 1986 Plan was submitted for approval, and was

approved, by HCFA, and it remains the basic reimbursement methodology employed in New

York State through and including rate year 2004.

11. In coimection with the submission by the State of the 1986 Plan to HCFA for

approval, New York was required to certify to HCFA that the reimbursement rate resulting from

its methodology would be “reasonable and adequate to meet the costs which must be incurred by

efficiently and economically operated facilities,” Le., would provide the reimbursement rate then

mandated by Federal law.

12. The “reasonable and adequate” rate requirement continues to be imposed by State

law. New York State Public Health Law, § 2807, subd. [3] independently mandates that the

Medicaid reimbursement rate be “reasonable and adequate to meet the costs which must be

incurred by efficiently and economically operated facilities.”

13. In general, New York fixes Medicaid reimbursement rates for an RHCF based on

the RHCF’s 1983 allowable costs for providing services to all its residents (i.e., regardless of

whether the cost was incurred with reference to a Medicaid, Medicare or private pay patient),

trended forward for various inflation factors. The State’s theory for utilizing costs now almost

twenty years old is based on the erroneous claim that the trend factor (an inflation adjustment)

will account for any increases in costs from 1983 to the present, and provide each RHCF with a

“reasonable and adequate” reimbursement rate as mandated by law.

14. Since January 1, 1986, DOH has utilized and applied a Medicaid reimbursement

system for nursing home facilities known as the RUG-II Methodology (“RUG-II”).

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15. Under the RUG-II system, each facility’s Medicaid reimbursement rate is based

on four (4) components: direct, indirect, non-comparable and capital costs.

16. The direct component of a facility’s rate (the “Direct Component”) is, normally,

the largest single category, generally representing approximately 50 percent of a nursing home’s

total operating costs. It includes costs such as salaries for nurses (Registered and LPNs), nurse’s

aides, physical therapy, occupational therapy, social service and related disciplines.

17. Indirect costs include items such as those incurred in connection with

administrative services, fiscal services, maintenance (other than utilities and real estate taxes),

patient food services, cafeteria, laundry and linen, and medical records.

18. Non-comparable costs include items such as laboratory services, radiology,

podiatry, dental, psychiatric, utilities and real estate taxes.

19. Capital costs include items such as interest expense on current and capital

indebtedness, and depreciation on plant, non-movable equipment and movable equipment.

20. The direct, indirect and non-comparable cost components form the operating

portion of a facility’s Medicaid reimbursement rate. For most facilities (including Plaintiff), the

operating portion is based on the facility’s 1983 base year costs, trended forward by an inflation

factor that is supposed to account for inflation.

21. The capital cost component generally is based on capital costs incurred by the

facility two years prior to the rate year, without any trending for inflation.

Changes mandated bv the federal Omnibus Budget Reconciliation Act of 1987

22. Prior to October 1, 1990, both federal and state law defined and recognized two

different categories of facilities - skilled nursing facilities (“SNFs”), which provided care to

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patients requiring a relatively high level of care, and intermediate care facilities (“ICFs”), also

known in New York State as health related facilities (“HRPs”)) which provided a somewhat less

intensive level of care than skilled nursing facilities.

23. Under New York State’s Medicaid reimbursement methodology in effect prior to

October 1, 1990, facilities participating in the Medicaid program were grouped separately both

by category (SNF or HRF) and by size (e.g., under 300 beds, 300 beds and over).

24. Prior to October 1, 1990, if a facility provided both levels of care (i.e., SNF and

HRF care), it received two different rates - one for its SNF patients and one for its HRF patients.

25. In 1990, the federal Omnibus Budget Reconciliation Act of 1987 (“OBRA”)

mandated an elimination of the distinction between SNFs and HRFS, requiring all facilities to

provide SNF services to all residents.

26. Following OBRA, and the elimination of the distinction between SNFs and

HRFS, all facilities have, for reimbursement purposes, been grouped by size without regard to

whether these facilities were previously SNF or HRF or a combination of both (a "split facility”).

27. Nevertheless, in calculating Plaintiffs 2004 operating portion of the rate, DOH

has utilized pre-October 1, 1990 data and statistics as if, functionally, no statutory change had

occurred. As a result, the calculations of key reimbursement components (e.g., bases, ceilings,

means) have been grossly distorted, and facilities such as Plaintiff have been deprived of

reimbursement to which they (including Plaintiff) are lawfully entitled under both federal and

state law.

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The “Reasonable and Adequate” Rate Standard

28. The Boren Amendment to the federal Medicaid Act (42 U.S.C. § 1396a et seq.)

previously required participating States, including New York, to find and make assurances

satisfactory to the Secretary of the United States Department of Health and Human Services, that

the State’s Medicaid Plan employs rates that are “reasonable and adequate to meet the costs

which must be incurred by efficiently and economically operated facilities in order to provide

care and services in conformity with applicable state and federal laws, regulations, and quality

and safety standards” (42 U.S.C. former § 1396a(a)(13)(A)).

29. Effective October 1,1997, the Boren Amendment was repealed. Concurrent with

that repeal, the federal government imposed other mandatory requirements on a State’s Medicaid

Plan, including provisions that the State provide a public process for determination of rates of

payment under the plan under which (a) proposed rates, methodologies underlying the

establishment of such rates, and justifications for the proposed rates are published, (b) providers,

beneficiaries and their representatives and other concerned State residents are given a reasonable

opportunity for review and comment on the proposed rates, methodologies and justifications, and

(c) final rates, the methodologies underlying the establishment of such rates and the justifications

for such final rates are published (42 U.S.C. § 1396a(a)(13)(A)). Moreover, federal regulations

mandate that when the State makes a change in its methods and standards, and not less than

annually, it must find that it pays for services “through the use of rates that are reasonable and

adequate to meet the costs that must be incurred by efficiently and economically operated

providers to provide services in conformity with applicable State and Federal laws, regulations,

and quality and safety standards” (42 CFR § 447.253(b)(l)(i)). (All the foregoing requirements

are collectively referred to herein as the “Post-Boren Requirements”).

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30. Further, the Medicaid Act requires a State Plan to assure that payments are

consistent with efficiency, economy and quality of care and are sufficient to enlist enough

providers so that care and services are available under the plan at least to the extent that such care

and services are available to the general population in the geographic area (42 U.S.C. §

1396a(a)(30)(A)).

31. In addition, CMS/HCFA regulations require a State to give public notice of any

significant proposed change in its methods and standards for setting payment rates for services.

32. Upon information and belief. New York State’s Medicaid Plan still provides and

requires that Defendants fix and provide a Medicaid reimbursement rate for each participating

RHCF which is “reasonable and adequate to meet the costs which must be incurred by efficiently

and economically operated facilities.”

33. Independent of the foregoing, New York Public Health Law, § 2807, subd. [3],

requires that rates be “reasonable and adequate to meet the costs which must be incurred by

efficiently and economically operated facilities.”

34. In or about November 2003, and by letter dated November 12,2003, the

Department of Health established the initial Medicaid reimbursement rates for Plaintiff for the

period January I, 2004 through December 31, 2004 (the “ 2004 Medicaid Rate”).

AS AND FOR A FIRST CLAIM FOR RELIEF PURSUANT TO CPLR SECTION 3001

35. Plaintiff repeats and realleges the allegations set forth in Paragraphs 1 through 34,

with the same force and effect as if set forth herein.

36. The 2004 Medicaid rate established and fixed for Plaintiff is not reasonable and

adequate to meet the costs which must be incurred by efficiently and economically operated

facilities, and violates federal and state law and the federal and state constitutions.

37. In 2000, the total annual cost of providing care to all residents at Plaintiff as

reported on Plaintiff’s RHCF-4 form* divided by the total number of patient days yielded an

average cost of care per patient day of $242,56. In contrast, the 2000 per diem Medicaid rate was

approximately $208.78 per Medicaid patient per day. Thus, on average, Medicaid paid Plaintiff

$33.78 less per patient day than the average cost of providing care and services to the Medicaid

resident. With 64,306 Medicaid days in 2000, the facility lost in excess of $2,172,000 in 2000

with respect to Medicaid residents.

38. Assuming that Plaintiff provides approximately the same number of Medicaid

patient days of care in 2004 as it did in 2000, it will suffer a comparable loss (and, indeed, that

loss will likely be greater since the Trend Factor used since 2000 is, upon information and belief,

less than the actual rate of increase in costs).

39. Medicare and Medicaid utilize the same core reimbursement principles. In this

regard, 10 NYCRR 86-2.17(a) provides that except as otherwise provided in subpart 86-2,

allowable costs for Medicaid reimbursement rates are to be determined by application of

Medicare reimbursement principles. Plaintiff’s Medicare reimbursement rate for caring for a

patient with the same needs as a Medicaid patient is substantially higher than its Medicaid rate.

40. Accordingly, the Medicaid rate for 2004 facially is not reasonable and adequate

to meet the costs that must be incurred by economically and efficiently operated facilities such as

Plaintiff to service its anticipated Medicaid population.

41. Additional facility specific examples and reasons why the Plaintiff’s 2004

Medicaid rate is contrary to law are set forth below.

A. Impermissible Use of Stale Data to Compute the Medicaid Reimbursement Rate

* The RHCF-4 form is the annual reporting form required to be filed by RHCFs. The most recent form filed is for 2000.

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42. As noted above, New York generally fixes Medicaid reimbursement rates for

RHCFs based on the RHCF’s 1983 allowable costs for providing services to all its residents, and

then trends those costs forward to supposedly account for inflation.

43. As long ago as 1992, however, the courts of New York found improper the State’s

continued reliance on trended 1983 costs, holding that the State had not made findings that the

use of stale data resulted in a rate that was reasonable and adequate to meet the costs which must

be incurred by efficiently and economically operated facilities (sec Matter of Lakeshore Nursing

Homev. Axelrod. 181 AD2d 333,586 NYS2d 433 [3d Dept 1992]; Matter of Momineside

House Nursing Home Companv Inc. v. Commissioner of the New York State Department of

Health. 206 AD2d 617,614 NYS2d 589 [3d Dept 1994]). Notwithstanding the courts’ rulings,

the State has continued to use 1983 operating costs trended forward as the basis for determining

rates.

44. Further, upon information and belief, the State has conducted studies which

demonstrate that if a more recent base year were used, a facility’s operating costs (direct costs,

indirect costs and noncomparable costs) would be higher than the facility’s 1983 costs trended

forward.

45. The continued use by the State of stale and outdated data, especially when more

recent and reliable data is available, results in a rate which is not reasonable and adequate to meet

the costs which must be incurred by efficiently and economically operated facilities.

B. Across-the-Board Reductions “toEncourage Improved Productivitv and Efficiency”

46. Defendants have imposed on Plaintiff (and all RHCFs) an arbitrary, across-the-

board reduction in Medicaid reimbursement rates paid to Plaintiff in the amount of $1.70 per

patient day.

47. The $ 1.71 per patient day reduction is applied afler DOH ostensibly established

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the “reasonable and adequate” rate for Plaintiff.

48. The $1.71 per patient day reduction was purportedly implemented under the guise

of encouraging “improved productivity and efficiency,” without, however, any factual or other

basis therefor.

49. Plaintiff provides approximately 64,000 Medicaid days of care per annum. As a

result of the arbitrary $1.71 per patient day reduction. Plaintiff will be deprived o f approximately

$108,800 in 2004 in Medicaid reimbursement to which it is otherwise clearly entitled to receive.

50. The arbitrary reduction in Plaintiffs rate (and every other RHCF’s rate) by virtue

of the “improved productivity and efficiency” reduction has impermissibly and imlawfully

reduced Plaintiffs Medicaid reimbursement rate.

51. The imposition of the across-the-board reduction also violates New York’s

Medicaid Plan and is a “significant change” thereto, requiring compliance with Post-Boren

Requirements.

52. Upon information and belief, there was no compliance with the Post-Boren

Requirements - nor could there have been - to warrant the slashing of Plaintiffs and, indeed,

every facility’s rates, merely because the State wants to reduce payments for budgetary

considerations.

53. Such budgetary considerations are, as a matter of law, irrelevant to the State

mandate that the rates be “reasonable and adequate to meet the costs which must be incurred by

efficiently and economically operated facilities.”

54. Moreover, upon information and belief, with respect to the aforesaid “productivity

and efficiency” reductions, the State has failed to comply with the notice and publication

requirements for a relevant plan amendment to be implemented under both state and federal law.

55. By reason of the imposition of the arbitrary reductions to encourage improved

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productivity and efficiency. Plaintiffs Medicaid rate has been improperly and illegally reduced.

C. Elimination of the 1997/1998 Trend Factor

56. Pursuant to its federally approved Medicaid State Plan, New YorkState generally

fixes reimbursement rates for RHCFs based on the facility’s 1983 (or other applicable base year)

allowable costs, trended forward for various inflation factors (the “Trend Factors”)*

57. The State’s Medicaid Plan requires Trend Factors to be applied annually.

58. By letter dated November 2,2003, Defendant DOH established Plaintiff s

Medicaid reimbursement rate for 2004, which failed to include trend factor projections or

adjustments for the period April 1, 1997 through March 31, 1998 (the “ 1997/1998 Trend

Factor”).

59. The failure to include the 1997/1998 Trend Factor for Plaintiffs 2004 Medicaid

reimbursement rate is illegal and contrary to law in a number of respects, including but not

limited to it violates the New York Public Health Law and Post-Boren Requirements (both

procedurally and substantively), violates the terms of the federally approved Medicaid Plan, is

arbitrary and capricious, constitutes an abuse of discretion, lacks a rational basis, and deprives

Plaintiff of the reimbursement mandated by applicable law.

60. Upon information and belief, the State did not make the requisite justifications

mandated by Post-Boren Requirements, in connection with the elimination of the 1997/1998

Trend Factor.

61. Nor, upon information and belief, did the State make the requisite findings and

assurances imder Boren with respect to previous eliminations of the Trend Factors.

62. Moreover, upon information and belief, any purported amendments to the State

Medicaid Plan made with respect to the State’s elimination of the 1997/1998 Trend Factor were

promulgated without providing the public notice required by the federal government.

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63. Upon information and belief, Defendants failed to timely file any proposed

amendment with CMS/HCFA (42 C.F.R. § 447.256).

64. Upon information and belief, Defendants did not provide CMS/HCFA with

accurate and correct assurances regarding compliance with the public notice requirement (see 42

C.F.R. § 447.205 and § 447.253).

65. Upon information and belief, Defendants have also failed to comply with the

notice provisions of the State Administrative Procedure Act, § 202.

66. Accordingly, for each and all o f the foregoing reasons, any purported amendments

to the State Medicaid Plan relating to the elimination of the 1997/1998 Trend Factor are

ineffective and invalid as a matter of law, and Plaintiff’s 2004 reimbursement rate must be

corrected to eliminate the failure to implement the 1997/1998 Trend Factor.

D. Reserved Bed Days

67. In general, in setting a facility’s rate, the facility’s allowable costs are divided by

the number of “patient days,” as that term is defined by applicable DOH regulations.

68. The Medicaid reimbursement rate for Plaintiff established and fixed by

Defendant Commissioner of DOH (and her predecessors) improperly included reserved bed days

in the total number of “patient days” and used said figure to compute per diem costs for rate

setting purposes.

69. In accordance with the requirements of law, however, only actual patient days,

without artificial, reserved days, should be used in the computation.

70. In this regard, section 86-2.8 of the Defendant Health Commissioner’s

Administrative Rules and Regulations provides in relevant part:

§ 86-2.8 Patient days, (a) A patient day is the imit of measure denoting lodging provided and services rendered to one patient between the census-taking hour on two successive days.

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(b) In computing patient days, the day of admission shall be counted but not the day of discharge. When a patient is admitted and discharged on the same day, this period shall be counted as one patient day.

(c) For reimbursement purposes residential health care facility days shall be determined by using the higher of the minimum utilization factor of 90 percent of certified beds or the actual patient days of care as furnished by the facility.

(d) Reserved bed patient days shall be computed separately from patient days. A reserved bed patient day is the 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.

71. Thus, the Commissioner’s regulations explicitly (a) distinguish between “patient

days” and “reserved bed days,” and (b) require that only the number of patient days be used in

calculating a facility’s rate and prohibit DOH from including the number of reserved bed patient

days within the number of patient days and from treating reserved bed days as patient days.

72. This interpretation of 10 NYCRE. § 86-2.8 - that the regulation prohibits reserved

bed days from being included in and treated as patient days - has been explicitly confirmed in a

written decision dated December 31,1996 rendered af^er a full administrative hearing conducted

pursuant to 18 NYCRR Part 519 (FH #2239398Y) (hereinafter, the “Hearing Decision”).

73. The Hearing Decision, which involved, inter alia, the same improper use of

reserved bed days as patient days in the calculation of the rates of another New York State

residential health care facility, has become final and binding on the Defendants.

74. Nonetheless, the rate sheets prepared by Defendant DOH for Plaintiff and

received after November 2,2003 erroneously included the number of reserved bed days within

the number of patient days.

75. By erroneously increasing the number of patient days (by including reserved bed

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days as patient days), the facility’s rate was improperly decreased. As a result, for rate-setting

purposes Plaintiff’s number of patient days has been improperly inflated and Plaintiffs per diem

rate has been fixed at an improperly and unlawfully reduced amount, contrary to law.

76. By reason of the foregoing, the Defendant's use of reserved bed days in

reimbursement calculations is in excess of jurisdiction, contrary to law, arbitrary and capricious

and an abuse of discretion, and Defendants should be directed promptly to recalculate Plaintiff s

reimbursement rate, using a corrected number of patient days, and to reimburse Plaintiff in

accordance therewith.

E. Reductions Caused bv Improper PRI Policy

77. The 2004 Medicaid rate for the facility has been promulgated based on patient

review instrument (“PRI”) data and the resultant case mix index (“CMI”).

78. The individual PRI and the resuhant CMI scores, however, are the product of

policies improperly imposed by the Department which (i) have not been properly promulgated or

published as a regulation, as required by law, and, (ii) even if properly promulgated, would be

invalid in any event for a variety of reasons including, without limitation, the fact that they

conflict with applicable statutes and impose requirements and standards that are arbitrary,

capricious and constitute an abuse of discretion on the part of the Department.

79. By way of example, the Department has imposed on all RHCF’s a standard that

results in reclassification of physician-ordered reimbursable restorative therapy to non

reimbursed maintenance therapy. A resident must receive restorative therapy if the facility’s

physical therapist and the attending physician determine that the resident shows a positive

potential for improved functional status within a short and predictable period of time.

80. Rather than follow this standard, DOH has reclassified restorative therapy

residents into maintenance therapy residents if, after the fact, it is decided by DOH that the

resident has not shown actual improvement in functional status.

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81. A sa result, the PRI and CMI scores have been artificially reduced, causing the

facility’s reimbursement rate for 2004 to be improperly reduced as well. This has occurred both

by reason of PRI audit adjustments and because the Department has insisted that the person

scoring the individual PRI’s for the facility follow the flawed and unauthorized policy described.

82. Accordingly, to the extent that the facility’s 2004 rate utilized or utilizes

improper PRI/CMI scores based on improper policies not authorized by law, it should be revised

to reflect proper PRJ/CMI scores.

F. The Cash Assessment

83. Beginning April 1,2002, budget legislation requires the imposition of a six (6%)

percent “assessment” on the gross receipts received by the facility from all patient care services

(except for Medicare revenue) and other operating income on a cash basis.

84. Pursuant to the budget legislation, as to Medicaid patient days, the 6% assessment

shall be a reimbursable cost to be reflected as timely as practicable in rates of payment applicable

within the assessment period, contingent, however, for payments by governmental agencies, on

all federal approvals necessary by federal law and regulations for federal financial participation

in payments made for beneficiaries eligible for medical assistance under title XIX.

85. However, due to the methodology adopted by the State, there will be a significant

time lag between the time the facility pays the assessment to the State and when the facility is

reimbursed, which effects a further improper cash flow burden on the facility.

86. The 6% assessment imposed on other revenues ( i.e. excluding Medicaid and

Medicare revenues) is neither reimbursed to the facility nor otherwise taken into account in the

calculation of the facility’s rate and significantly reduces the funds available to the facility to

meet its patient care costs.

16

87. As a result, Plaintiffs Medicaid reimbursement rate will be effectively and

improperly reduced, and for this reason as well, will not be reasonable and adequate to meet the

costs which must be incurred by efficiently and economically operated facilities.

G. Exclusion of Agency and Registry Nurses from RegionalInput Price Adjustment Factor (“RIPAF”) and WageEqualization Factor Computations__________

88. Defendants’ calculation of Plaintiff's 2004 Medicaid reimbursement rate

excluded the hours and related costs of agency and/or registry nurses (“Outside Nursing

Services”) incurred by residential health care facilities in New York State in the base year from

the calculation of RIPAF and WEF computations.

89. As noted above, the direct component of a facility's rate is, normally, the largest

single category, generally representing approximately 50 percent of a nursing home’s total

operating costs and includes costs such as salaries for nurses (Registered and LPNs) and aides.

90. During the base year, there was a need for RHCFs to utilize Outside Nursing

Services in order to properly staff RHCFs and those costs are allowable base year costs for rate-

setting purposes.

91. There is no statutory, regulatory or rational basis for the exclusion of the costs for

utilization of Outside Nursing Services from the rate setting RIPAF and WEF methodology and

the same deprives facilities of the reasonable reimbursement required by law, is arbitrary and

capricious, constitutes an abuse of discretion, and lacks a rational basis, all in violation of

applicable law.

H. Administrative and Fiscal Services Cost Cap

92. By letter dated November 1,2003, Defendant DOH generally established

Plaintiffs Medicaid reimbursement rate for 2004 and included therein, among other things, a

17

* ►.

reduction in Plaintiffs 2004 rate based on the imposition of a cap on the facility's administrative

and fiscal services costs,

93. The reduction in Plaintiffs rate results from the imposition of a nine (9) percent

cap on its administrative and fiscal services costs, i.e., the facility’s 1983 administrative and

fiscal services costs (or, if it has a base period subsequent to 1983, its base period costs are “de

trended” to 1983) are limited to nine (9) percent of its total base year operating costs based on a

statewide administrative and fiscal services cost average for 1983; the reduction is then trended

forward (increased) for application to the current rate year.

94. The imposition of an administrative and fiscal services cap is illegal and contrary

to law in a number of respects, including but not limited to it violates the New York Public

Health Law and Post-Boren Requirements (both procedurally and substantively), is arbitrary and

capricious, constitutes an abuse of discretion, lacks a rational basis, deprives Plaintiff of the

reimbursement mandated by applicable law, and, in any event, the reduction is being applied

contrary to the legislation enacting it.

95. Upon information and belief, prior to the repeal of Boren, the State did not make

the requisite findings and assurances previously mandated by Boren with respect to the cap on

administrative and fiscal services costs, nor can the methodology underlying the cap be rationally

justified under Post-Boren Requirements or the Public Health Law.

96. Further, the comparison of a facility’s administrative and fiscal services costs to a

statewide average is based on a distorted methodology. To begin with, not all statewide

administrative and fiscal services costs are considered in the calculation; rather, the statewide

figures used already result from caps and ceilings on various items within the area of

administrative and fiscal costs, including, for example, ceilings on salaries of operators,

administrators and assistant administrators, as well as ceilings on direct and indirect costs for

overall administrative services.

18

»>

97. In addition, the State’s calculation is based on stale and inaccurate data, namely,

allowable reported costs for 1983. Excluded from the administrative and fiscal cap calculations

are available and more current data, including data for facilities with new base periods,

receiverships, new operators and/or new facilities since 1983, and for all other facilities (for

which cost data is available for years through 2000). Nor does the State's calculation reflect audit

adjustments made by DOH and the former Department of Social Services to each facility’s base

year cost reports.

98. Moreover, since 1983 there have been significant changes and additions to the

costs incurred by facilities for administrative and fiscal services. For example, since 1983

facilities now incur new or greater costs for various items, including the following;

(a) new and additional services, including but not limited to, physical therapy, dental services and salaried physicians, resulting in increased administrative and fiscal costs;

(b) increased patient acuity with concomitant additional admissions, discharges and deaths, resulting in increased administrative and fiscal costs;

(c) electronic filing of cost reports, billings, PRIs and other computerization requirements, resulting in increased administrative and fiscal costs;

(d) additional accounting, auditing, legal and consulting costs to comply with governmental requirements, resulting in increased administrative and fiscal costs; and

(e) additional administrative and fiscal costs to render the computer and software systems used by facilities “Y2k compliant,” i.e., ableto function efficiently on and after January 1,2000.

99. Thus, the resulting rate, reduced by the imposition of an administrative and fiscal

19

services costs cap, is not reasonable and adequate to meet the costs which must be incurred by

efficiently and economically operated facilities.

100. The use of a statewide across-the-board limitation is also improper because it fails

to recognize differences among facilities in different regional areas, as well as differences

between facilities according to their size.

101. Moreover, since 1983 the distinction between SNFs and HRFs has been

eliminated, with facilities being encouraged to admit patients requiring greater resource intensive

care. Facilities which in the 1983 base year had a high SNF patient population might be expected

to allocate proportionately less for administrative and fiscal services because their

proportionately greatest costs will be for the direct care of the patients. For these, and other,

reasons, a cap of nine (9) percent is arbitrary.

102. Moreover, on information and belief, the State has permitted only corrections of

base year data that affect the administrative and fiscal services costs, but not changes resuhing

from administrative appeals which would, for example, establish the facility's new or increased

administrative and fiscal services costs.

103. In any event, although administrative and fiscal services costs are an indirect cost,

DOH has reduced other cost components, including direct costs, in connection with the

administrative and fiscal services cost reduction.

104. Moreover, upon information and belief, any amendments to the State Medicaid

Plan purportedly made with respect to the State’s imposition of the administrative and fiscal

services costs cap were promulgated without providing the public notice required by the federal

government.

105. Upon information and belief. Defendants failed to timely file with CMS/HCFA

20

any purported amendment relevant to this issue (42 C.F.R. § 447.256).

106. Upon information and belief. Defendants did not provide CMS/HCFA with

accurate and correct assurances regarding compliance with the public notice requirement (see 42

C.F.R. § 447.205 and 447.253).

107. Upon information and belief. Defendants have also failed to comply with the

notice provisions of the State Administrative Procedure Act, §202.

108. Accordingly, the purported amendments to the State Medicaid Plan concerning

the cap on administrative and fiscal services costs are ineffective and invalid as a matter of law.

109. For all the foregoing reasons, the cap on administrative and fiscal services costs is

invalid for 2004.

I. Use of Improper Grouping and Outdated Base YearData to Compute the hidirect Component of MedicaidReimbursement Rate__________________________

110. Plaintiffs 2004 Medicaid Reimbursement rate has been fixed at a level which

does not properly reflect Plaintiffs costs, including Plaintiffs current “indirect component” costs.

111. Notwithstanding the changes mandated by OBRA, in calculating Plaintiffs 2004

indirect component for Medicaid reimbursement purposes, DOH has utilized pre-October 1,

1990 data and statistics. As a result, the calculations of key reimbursement components (e.g.,

bases, ceilings, means) have been grossly distorted, and facilities such as Plaintiff have been

deprived of reimbursement to which they (including Plaintiff) are lawfully entitled under both

federal and state law. To correct this improper and invalid result, DOH must eliminate the use of

pre-October 1, 1990 statistics, and instead utilize relevant post-October 1, 1990 statistics, to

reflect the actual cost experience during the period after OBRA eliminated the distinction

between SNFs and HRFs.

112. As a result of the foregoing. Plaintiffs 2004 rate does not recognize all of

21

Plaintiffs mandated current costs and, accordingly, has been improperly reduced.

113. By reason of the foregoing. Plaintiff’s Medicaid reimbursement rate for 2004 has

been arbitrarily, capriciously and improperly fixed at an artificially low rate, in excess of

jurisdiction, in abuse of discretion, and contrary to law.

J. Imposition of Ceiling on Indirect Costs

114. The indirect ceiling imposed by DOH with respect to Plaintiffs 2004

reimbursement rate has been fixed at an artificially depressed level which does not reflect the

actual costs that must be incurred by Plaintiff to provide the level of care mandated by applicable

Federal and State law.

115. Despite the dramatic changes in the industry which followed the 1990 adoption of

OBRA (eliminating the distinctions between SNFs and HRFs), DOH has maintained the same

effective ceiling, which does not account for the sharply increased and new categories of costs

incurred since 1990.

116. As a result, facilities such as Plaintiff which, in compliance with OBRA have

admitted patients requiring greater resource intensive services and care, have been and continue

to be unfairly penalized by having portions of their legitimate costs disallowed.

117. Plaintiffs 2004 rate has been adversely and unfairly reduced by the imposition of

this artificially depressed ceiling because various actual and allowable costs have been

disallowed for reimbursement purposes.

118. By reason of the foregoing, Plaintiffs 2004 reimbursement rate has been

improperly and illegally reduced, and should be adjusted upward by eliminating the artificial and

arbitrary limitation imposed by virtue of the aforesaid ceiling on indirect costs.^

And, in this area as well, there exists the same fimdamental defect that the ceiling is calculated on the basis of stale and irrelevant data (1983 costs).

22

A r

K. Plaintiffs rate has been improperly reduced bv Defendants^ failure to fund HCRA-

mandated expenditures

119. The Healthcare Workforce Recruitment and Retention Act of 2002 (“HCRA”)

provides, inter alia, that facilities which actually provide and pay for increased financial benefits

to health care workers will receive additional funding to be reimbursed therefor.

120. Defendant’s methodology with respect to payment of the HCRA add-on, however,

is fundamentally flawed.

121. Defendant DOH’s methodology is premised on the assumption that the 2004

Medicaid utilization for a facility will be the same as or greater than it was in the year 2000.

122. The foregoing assumption, however, is not, and cannot be, correct with respect to

all facilities, particularly since current and anticipated Medicaid utilization is, and upon

information and belief will be, significantly lower than it was in the past comparative period.

123. Further, in connection with the HCRA legislation, the State is required to provide

various grants and pilot programs which were to provide additional reimbursement to help offset

HCRA-mandated expenditures.

124. No HCRA grants have been paid or approved for the facility.

125. Further, the trend factor rate utilized by DOH in its submission in support of the

HCRA legislation is substantially higher than the actual inflation trend factor which has bene

utilized for rate year 2004.

126. By reason of the foregoing, Plaintiffs rate has been arbitrarily and illegally

reduced, resulting in a rate that is not adequate to meet the costs which must be occurred by

efficiently and economically operated facilities.

L. Administrative Appeal Issues

23

T I '

127. In addition to the foregoing, Plaintiff has and or will file administrative appeals

challenging various aspects of the 2004 Medicaid reimbursement rate fixed for Plaintiff

(incorporated herein by reference). If, and to the extent that, any portion of those administrative

appeals is rejected, withdrawn or denied, based on a claim that the same is not properly subject to

administrative appeal. Plaintiff incorporates herein each and all said administrative appeal issues

as part of this Complaint and proceeding.

* ♦

128. By reason of the foregoing, Plaintiff seeks a judgment (a) declaring that Plaintiffs

2004 Medicaid reimbursement rate has erroneously been fixed at an improperly low level,

contrary to applicable law, and (b) directing that Plaintiffs 2004 Medicaid reimbursement rate

be recomputed and raised to the higher rate to which Plaintiff is entitled, in accordance with

applicable law.

AS AND FOR A SECOND CLAIM FOR RELIEF PURSUANT TO CPLR ARTICLE 78

129. Plaintiff repeats and realleges the allegations set forth in 1 through 128, with

the same force and effect as if set forth herein.

130. By reason of the foregoing, the 2004 Medicaid rate established and fixed for

Plaintiff was improper, arbitrary and capricious, in violation of applicable law, and, as such,

constitutes an abuse of discretion and is in excess of Defendants’ (and each of their) proper

jurisdiction.

WHEREFORE, Plaintiff demands judgment (a) pursuant to CPLR 3001 (i) declaring that

Plaintiffs 2004 Medicaid reimbursement rate has erroneously been fixed at an improperly low

level, contrary to applicable law, and (ii) directing that Plaintiffs 2004 Medicaid reimbursement

rate be recomputed and raised to the higher rate to which Plaintiff is entitled, in accordance with

applicable law; (b) pursuant to CPLR Article 78 directing Defendants to recompute the 2004

24

^ 'I . J

i

!

!•

* ‘• I t ir >

Medicaid reimbursement rate for Plaintiff, and, upon recomputation, granting Plaintiff increased

reimbursement in accordance therewith; and (c) granting such other, further and different relief in

favor of Plaintiff as to the Court seems just and proper.

Dated: February 20,2004New York, New York

THE LAW OFFICES OF DAVID B.BERNFELD Attorneys for Plaintiff

Davl^? BentfSW122 East 42" * Street Suite 606New York, New York 10168 (212) 661-1661

25

ATTORNEY'S AFFIRMATION IN LIEU OF VERIFICATION

STATE OF NEW YORK: COUNTY OF NEW YORK

The undersigned, an attorney admitted to practice in the courts of New York State, hereby

states:

Deponent is a member of the Law Offices of David B. Bemfeld, attorneys for Plaintiff

ST. VINCENT de PAUL RESIDENCE, a not-for-profit corporation. This verification is made

by me pursuant to CPLR 3020(d)(3) because the Plaintiff has no office in the county where our

firm has its offices.

I have read the foregoing Verified Complaint and know the contents thereof; on

information and belief I believe them to be true.

The sources of my information and the groimds for such belief include the following:

review of correspondence between the New York State Department of Health and Plaintiff and

Plaintiffs Medicaid reimbursement consultant; conversations with the Medicaid reimbursement

consultant for Plaintiff; and conversations had by me and/or other attorneys in my firm with

officers and agents of Plaintiff.

Dated: New York, New York February 20,2004

<

____________________ Index No.____________________SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF THE BRONX

ST. VINCENT de PAUL RESIDENCE, a Not-for Profit Corporation,

Plaintiff,

-against-


Defendants.

SUMMONS AND COMPLAINT

IfT h e L a w O f f i ^ s q I 'D

1 2 2 E a s t ^ 2 ' '“ St r e N ew Y ^ik,I© cw

g :2 1 2 ‘ 6 1 -

B . B e r n f e l d Su it e 606

10168

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF BRONX......................... X

ST. VINCENT de PAUL RESIDENCE, a Not-for-Profit Corporation,

Plaintiff,-against-

MTONIA C. NOVELLO, M.D., as Commissioner of the Department of Health of the State of New York and on behalf of the Department of Health of the State of New York, and CAROLE E. STONE, as Director of the Budget of the State of New York,

Defendants. --------- X

Defendants ANTONIA C. NOVELLO, M.D., as Commissioner of the Department of Health of the State of New York and on behalf of the Department of Health of the State of New York, and CAROLE E. STONE, as Director of the Budget of the State of New York, by their attorney, ELIOT SPITZER, Attorney General of the State of New York, answer plaintiff's Verified Complaint as follows:

1. Admit the allegations contained in paragraphs 1, 2, 3, and 4 of the Verified Complaint.

2. Deny the allegations contained in paragraph 5 of the Verified Complaint, allege that these allegations are plaintiff's characterizations of this action, and deny that plaintiff is entitled to the relief sought.

1 4 2D04

VERIFIED ANSWER Index No. 8773/04

I ( • *'

3. With respect to the allegations contained in paragraph6 of the Verified Complaint, defendants respectfully refer the Court to Title XIX of the Social Security Act, 42 U.S.C. §§ 1396a, et sea. . as the best evidence of its contents, provisions and requirements and deny to the extent inconsistent therewith.

4. With respect to the allegations contained in paragraph7 of the Verified Complaint, defendants respectfully refer the Court to the federal Medicaid statute and all regulations promulgated thereunder referenced therein as the best evidence of their contents, provisions and requirements and deny to the extent inconsistent therewith.

5. With respect to the allegations contained in paragraph8 of the Verified Complaint, defendants respectfully refer the Court to Article 28 of the Public Health Law and subpart 86-2 of the Health Commissioner's Administrative Rules and Regulations (10 N.Y.C.R.R.) as the best evidence of their contents, provisions and requirements and deny to the extent inconsistent therewith.

6. With respect to the allegations contained in paragraph9 of the Verified Complaint, defendants respectfully refer the Court to the State Medicaid Plan referenced therein as the best evidence of its contents, provisions and requirements and deny to the extent inconsistent therewith.

7. Admit the allegations contained in paragraph 10 of theVerified Complaint.

2

8. With respect to the allegations contained in paragraph11 of the Verified Complaint, defendants respectfully refer theCourt to former 42 U.S.C. § 1396a(a)(13)(A), as the best evidence of its contents, provisions and requirements and deny to the extent inconsistent therewith.

9. With respect to the allegations contained in paragraph12 of the Verified Complaint, defendants respectfully refer theCourt to New York State Public Health Law § 2807(3) as the best evidence of its contents, provisions and requirements and deny to the extent inconsistent therewith.

10. Deny the allegations contained in paragraph 13 of the Verified Complaint.

11. Admit the allegations contained in paragraphs 14, 15,16, 17, 18, 19, 20 and 21 of the Verified Complaint.

12. With respect to the allegations contained in paragraph22 of the Verified Complaint, defendants respectfully refer theCourt to the federal and State laws referenced therein as the best evidence of their contents, provisions and requirements and deny to the extent inconsistent therewith.

13. Admit the allegations contained in paragraphs 23 and 24 of the Verified Complaint.

14. With respect to the allegations contained in paragraph25 of the Verified Complaint, defendants respectfully refer theCourt to the Omnibus Budget Reconciliation Act of 1987 ("OBRA") as

3

the best evidence of its contents, provisions and requirements and deny to the extent inconsistent therewith.

15. Admit the allegations contained in paragraph 26 of the Verified Complaint.


17. With respect to the allegations contained in paragraph28 of the Verified Complaint, defendants respectfully refer theCourt to the Boren Amendment, former 42 U.S.C. § 1396a(a)(13)(A), as the best evidence of its contents, provisions and requirements and deny to the extent inconsistent therewith.

18. With respect to the allegations contained in paragraph29 of the Verified Complaint, defendants respectfully refer theCourt to the current 42 U.S.C. § 1396a(a)(13)(A) and 42 C.F.R.§ 447.253 (b) (1) (i) , as the best evidence of their contents,provisions and requirements and deny to the extent inconsistent therewith.

19. With respect to the allegations contained in paragraph30 of the Verified Complaint, defendants respectfully refer theCourt to current 42 U.S.C. § 1396a(a) (30) (A), as the best evidence of its contents, provisions and requirements and deny to the extent inconsistent therewith.

20. With respect to the allegations contained in paragraph31 of the Verified Complaint, defendants respectfully refer the

4

Court to the CMS/HCFA regulations referenced therein as the best evidence of their contents, provisions and requirements and deny to the extent inconsistent therewith.

21. With respect to the allegations contained in paragraph32 of the Verified Complaint, defendants respectfully refer theCourt to the New York State Medicaid Plan referenced therein as the best evidence of its contents, provisions and requirements and deny to the extent inconsistent therewith.

22. With respect to the allegations contained in paragraph33 of the Verified Complaint, defendants respectfully refer the

Court to New York Public Health Law § 2807 (3) as the best evidence of its contents, provisions and requirements and deny to the extent inconsistent therewith.


24. With respect to the allegations contained in paragraph 35 of the Verified Complaint, defendants hereby repeat and reallege their prior responses to the allegations made in paragraphs 1 through 34 of the Verified Complaint.

25. Deny the allegations contained in paragraph 36, 37, and38 of the Verified Complaint.

26. With respect to the allegations contained in paragraph39 of the Verified Complaint, defendants respectfully refer the Court to 10 N.Y.C.R.R. § 86-2.17(a) as the best evidence of its

5

contents, provisions and requirements and deny to the extent inconsistent therewith except deny knowledge and information sufficient to form a belief as to the truth of the allegations contained in the first and last sentences of said paragraph,

27. Deny the allegations contained in paragraphs 40, 41, and

42 of the Verified Complaint.28. Deny the allegations contained in paragraph 43 of the

Verified Complaint and respectfully refer the Court to the court decisions referenced therein as the best evidence of their contents and meaning.

29. With respect to the allegations contained in paragraph 44 of the Verified Complaint, admit that the State did conduct a study in the past but deny that such study is relevant to the 2004 rate period.

30. Deny the allegations contained in paragraphs 45, 46, 47,48, 49, 50, 51, 52, 53, 54, and 55 of the Verified Complaint.

31. With respect to the allegations contained in paragraphs 56 and 57 of the Verified Complaint, defendants respectfully refer the Court to the New York State Medicaid Plan referenced therein as the best evidence of its contents, provisions and requirements and deny to the extent inconsistent therewith.

32. Deny the allegations contained in paragraphs 58, 59, 60,61, 62, 63, 64, 65, and 66 of the Verified Complaint.

6

33. With respect to the allegations contained in paragraph67 of the Verified Complaint, defendants respectfully refer theCourt to 10 N.Y.C.R.R. Part 86-2 as the best evidence of itscontents, provisions and requirements and deny to the extentinconsistent therewith.

34. Deny the allegations contained in paragraphs 68 and 69 of the Verified Complaint.

35. With respect to the allegations contained in paragraphs 70 and 71 of the Verified Complaint, defendants respectfully refer the Court to 10 N.Y.C.R.R. § 86-2.8 as the best evidence of itscontents, provisions and requirements and deny to the extentinconsistent therewith.

36. With respect to the allegations contained in paragraph72 of the Verified Complaint, defendants respectfully refer theCourt to the written decision dated December 31, 1996 referenced therein as the best evidence of its contents and meaning and deny to the extent inconsistent therewith.

37. Deny the allegations contained in paragraphs 73, 74, 75, and 76 of the Verified Complaint.



7

40. Deny the allegations contained in paragraph 80 of the Verified Complaint except admit that the Department of Health has reclassified residents who have not shown actual improvement in functional status from restorative therapy to maintenance therapy.

41. Deny the allegations contained in paragraphs 81 and 82 of the Verified Complaint,

42. Deny the allegations contained in paragraphs 83 and 84 of the Verified Complaint and respectfully refer the Court to the budget legislation referenced therein as the best evidence of its contents, provisions and requirements.

43. Deny the allegations contained in paragraphs 85, 86, and

87 of the Verified Complaint.44. Admit the allegations contained in paragraphs 88 and 89

of the Verified Complaint.45. Deny knowledge and information sufficient to form a

belief as to the truth of the allegations contained in paragraph 90 of the Verified Complaint.


47. Deny the allegations contained in paragraphs 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, and 102 of the Verified Complaint,


8

49. Deny the allegations contained in paragraphs 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, and 118 of the Verified Complaint.

50. With respect to the allegations contained in paragraph

119 of the Verified Complaint, defendants respectfully refer the Court to the Healthcare Workforce Recruitment and Retention Act of 2002 ("HCRA")/ Ch. 1, Laws of 2002, as the best evidence of its contents, provisions and requirements and deny to the extent inconsistent therewith.


52. Deny knowledge and information sufficient to form abelief as to the truth of the allegations contained in paragraph122 of the Verified Complaint.

53. With respect to the allegations contained in paragraph123 of the Verified Complaint, defendants respectfully refer the Court to the Healthcare Workforce Recruitment and Retention Act of 2002 ("HCRA")/ Ch. 1, Laws of 2002, as the best evidence of itscontents, provisions and requirements and deny to the extentinconsistent therewith.


55. Deny knowledge and information sufficient to form abelief as to the truth of the allegations contained in paragraph

9

125 of the Verified Complaint.


57. Deny knowledge and information sufficient to form a belief as to the truth of the allegations contained in paragraph 127 of the Verified Complaint except admit that plaintiff has filed administrative appeals challenging various aspects of the 2004 Medicaid reimbursement rate fixed for Plaintiff.

58. Deny the allegations contained in paragraph 128 of the Verified Complaint,

59. With respect to the allegations contained in paragraph 129 of the Verified Complaint, defendants hereby repeat and reallege their prior responses to the allegations made in paragraphs 1 through 128 of the Verified Complaint.


61. With respect to "Wherefore" clause, and all subparts thereto, they constitute plaintiff*s prayer for relief to which no response is required, but to the extent a response is required, deny any entitlement to the relief sought.

62. Deny the allegations contained in any paragraph of the Verified Complaint not hereinbefore admitted or denied.

1 0

AS AND FOR A FIRST SEPARATE AND COMPLETE DEFENSE DEFENDANTS ALLEGE:

63. The Verified Complaint fails to state a claim or cause of action upon which relief may be granted.

AS AND FOR A SECOND SEPARATE AND COMPLETE DEFENSE DEFENDANTS ALLEGE:

64. The plaintiff has failed to timely exhaust its administrative remedies.

AS AND FOR A THIRD SEPARATE AND COMPLETE DEFENSE DEFENDANTS ALLEGE:

65. The action, in whole or in part, is unripe for judicial review.

AS AND FOR A FOURTH SEPARATE AND COMPLETE DEFENSE DEFENDANTS ALLEGE:

66. The actions of defendants were rendered in accordance with all applicable statutes, rules and regulations and the federal and State constitutions.

67. Defendants' actions were wholly within defendants' power, authority, jurisdiction, and discretion and were neither arbitrary and capricious, an abuse of discretion, an error of law, nor in excess of their authority or jurisdiction.

AS AND FOR A FIFTH SEPARATE AND COMPLETE DEFENSE DEFENDANTS ALLEGE:

68. Plaintiff's claims are barred in whole or in part by the principles of res judicata and/or collateral estoppel.

1 1

AS AND FOR AN SIXTH SEPARATE AND COMPLETE DEFENSE DEFENDANTS ALLEGE:

69. Defendants have not violated any of plaintiff's dueprocess or equal protection rights (or any rights under the federalsupremacy clause, if any).

AS AND FOR AN SEVENTH SEPARATE AND COMPLETE DEFENSE DEFENDANTS ALLEGE:

70. The action was improperly filed as a Verified Complaintand a declaratory judgment action and should be converted to aproceeding pursuant to Article 78 of the CPLR pursuant to CPLR §103 with all pleadings in this action to be treated as beingbrought solely pursuant to Article 78 of the CPLR.

AS AND FOR AN EIGHTH SEPARATE AND COMPLETE DEFENSE DEFENDANTS ALLEGE:

71. One or more of plaintiff's claims are barred by sovereign immunity.

AS AND FOR A NINTH SEPARATE AITO COMPLETE DEFENSE DEFENDAITTS ALLEGE:

72. Plaintiff's claims based on the Boren Amendment, 42U.S.C. § 1396a(a)(13)(A), are moot, at least from October 1, 1997forward. Pub. L. No. 105-33, 111 Stat. 251, § 4711 (1997).

AS AND FOR A TENTH SEPARATE AND COMPLETE DEFENSE DEFENDANTS ALLEGE:

73. Plaintiff's claims are barred in whole or part by the failure to plead them with sufficient particularity as required by CPLR § 3013.

1 2

■»

WHEREFORE, defendants respectfully request this Court togrant an Order dismissing the plaintiff's Verified Complaint in itsentirety, denying each and every claim contained there, andawarding such other and further relief as the Court deems just andproper.Dated: New York, New York

September 3, 2004ELIOT SPITZER Attorney General of the State of New York

Attorney for Defendants

MAssistant Attorney General 120 Broadway, Rm 24-22 New York, New York 10271 Tel. (212) 416-8651

By:

1 3

SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF BRONX


Plaintiff,against


Defendants.

STATE OF NEW YORK ) COUNTY OF ALBANY )

S S . :

X

Index No. 8773/04 VERIFICATION

•X

JOSEPH C. BIERMAN, being duly sworn, deposes and says:1. I am a Principal Attorney in the Division of Legal

Affairs for the New York State Department of Health and am duly authorized to make this verification.

2. I have read the foregoing answer and know the contents thereof and the same is true to the best of my knowledge and belief, except as to matters therein stated to be alleged on information and belief, and as to those matters I believe them to be true.

3. This verification is made by me pursuant to CPLR

§ 3020(d)(2) because the defendants are state officials and I am acquainted with the facts. The reason why this verification is made by me is that the primary defendant in interest is the Commissioner of the New York State Department of Health.

4. The sources of my information and the grounds for mybelief are statements, records, and reports of officers and employees of the New York State Department of Health and docu ments and correspondence in the possession of the Department.

Sworn to before me this day of August, 2004

State of New York County ofMy commission expires:

_ A p n \ _ 1S ________

M A R Y K . COTUGNO NO TARY PU B LIC , STATE O F N EW YORK

NO.01C06072774 QUALIFIED IN R E N SS E L A E R COUNTY

M Y C O M M ISS IO N EX PIRES A P R IL 1 5 . 2 0 f i l ,

"QSEPH C. BIERMAN

SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF BRONX

---------------------------------- X


Plaintiff,-against-

ANTONIA C, NOVELLO, M.D., as Commissioner of the Department of Health of the State of New York and on behalf of the Department of Health of the State of New York, and CAROLE E. STONE, as Director of the Budget of the State of New York,

Defendants.------ X

STATE OF NEW YORK ): SS. :

COUNTY OF NEW YORK )duly sworn, deposes and

says:I am over eighteen years of age and I am not a party to

this lawsuit. I reside or am regularly employed in the County of New York, State of New York.

On the JO day of September, 2004, I served the annexedVerified Answer in the captioned action upon:Mr David B. Bernfeld The Law Offices of David B. Bernfeld 122 East 42nd Street, Suite 606 New York, New York 10168 Attorneys for Plaintiffby personally delivering to and leaving a copy thereof with the

AFFIDAVIT OF SERVICE UPON A LAW OFFICE

Index No. 8773/04

office of said attorneys at that address, that being the address designated by them for that purpose,'^

Sworn to before me thisday of September, 2004

___Assistant/ Attorney General of the State of New York

I n d e x N o . 8 7 7 3 / 0 4Sir;

Please take uollce lhat ihc wllhin is a ln»c copy of(inly filed and entered in Ihc office o f tl’ie Clerk

County, on ' day o f ,2 0

Yours, ctc,.ELIOT SPITZER

Alloincy Genera!,

Attorney For

Officc atut Post Office Address 120 Broadway, New York, N.Y. 10271

Attorney for

Sir:Please take notice that tiie within

will he presented tor settlement and signature herein to Ihe Mon.one o f the judges of tlie within named Court, at . ^ ^

in the Borougli of City of New York, on tiic

20Dated, N.Y., ,20

Yoius, etc.ELIOT SPITZER

Attoiney General,Attorney For

Ofllcc and Post Oificc Address 120 Broadway, New York, N.Y. 10271

Attorney for

SUPREME COURT OF THE STATE OF NEW YORK : COUNTY OF THE BRONXST. VINCENT dePAUL RESIDENCE, a Not-for-Profit Corporation,

Plaintiff,-against-

ANTONIA C. NOVELLO, M.D. , as Commissioner of the Department of Health of the State of New York & on behalf of the Department of Health of the State of New York, and CAROLE E. STONE, as Director of the Budget of the State of New York, Defendants.

VERIFIED ANSWER

ELIOT SPITZERAttorney General

t M n ^ ^ r . .... .................................

Office and Post Office Address120 Broadway, New York, N.Y. 10271

Tel. ( 2 1 2 ) 4 1 6 - 8 6 5 1Personal servica o f a copy o f

wiihin.......................................'...........................

is admitted tiiis...............................................day of

20 ■

STATE OF NEW YORK ^

COUNTY OF NEW YORK )

................ ......................oeingduly swom, deposes and says

That he is___________ _________________________________________________ in the office o f the Attorney General o f the

State o f New York, the Attorney for________ herem. On the,______

dcy of-----------------------------------------,20 i Q annexed upon the following named persons:

Anomey in the within emitled— ;____________________________________ Z>y depostbzg a true and correct copy thereof properly

enclosed in a post-paid wrapper, in a post-office box regidarfy mamtarned by the Govemmenr o f the United States at 120

BROADWAY NEW YORK. KY. 10271 directed to said Anomey at the address wthin the state designated by.__________________

for that purpose.

Sworn to before me this

day o f.................................... 20

As^tant Attorney General of the State o f New York

New York State Supreme Court Bronx County Case # 2004 ...

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Transcript of New York State Supreme Court Bronx County Case # 2004 ...