New York Law Review

Catholic Med. Ctr. v. Dept. of Health, 48 N.Y.2d 967 (1979): Judicial Review of Rate-Fixing Orders

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The New York Law Review

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48 N.Y.2d 967 (1979)

Rate-fixing orders by the Commissioner of Health, being quasi-legislative, are subject to limited judicial review and can only be annulled upon a compelling showing that the calculations are unreasonable.

Summary

Catholic Medical Center challenged the Department of Health’s Medicaid reimbursement rates for 1972. The Court of Appeals affirmed the Appellate Division’s order, holding that the rate-fixing order of the Commissioner of Health, as a quasi-legislative act, could only be overturned with compelling evidence of unreasonable calculations. The court emphasized that the Commissioner could consider broader judgmental factors, like incentives for service improvement and economic factors, beyond just factual data, based on agency expertise. The dissent argued that the Appellate Division erred by not considering factual evidence presented at a Special Term hearing, which suggested the Commissioner deviated from Public Health Law § 2807.

Facts

Catholic Medical Center of Brooklyn and Queens contested the Medicaid reimbursement rates set by the Department of Health for the year 1972. The Medical Center appealed for a revision of these rates, alleging impropriety in their calculation.

Procedural History

Special Term initially ruled in favor of Catholic Medical Center, finding that the Department of Health improperly deviated from Public Health Law § 2807. The Appellate Division reversed this decision and ordered a hearing to determine whether the Commissioner had deviated from the law. After the hearing, Special Term again concluded that the Commissioner had failed to follow § 2807. The Appellate Division then reversed this second ruling, citing the Court of Appeals’ decision in St. Luke’s Hosp. Center v. Ingraham. The Court of Appeals then reviewed the Appellate Division’s final order.

Issue(s)

Whether the rate-fixing order of the Commissioner of Health should be annulled.

Holding

No, because the rate-fixing order is quasi-legislative and can only be annulled upon a compelling showing that the calculations from which it derived were unreasonable.

Court’s Reasoning

The Court of Appeals affirmed the Appellate Division’s decision, emphasizing the limited scope of judicial review over quasi-legislative actions like rate-fixing. The court stated that the Commissioner of Health is not confined to factual data alone when making such determinations but

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