New York Law Review

Tag: Medicaid recoupment

  • Visiting Nurse Service of New York Home Care v. New York State Department of Health, 5 N.Y.3d 503 (2005): Entitlement to Hearing Before Medicaid Recoupment

    Visiting Nurse Service of New York Home Care v. New York State Department of Health, 5 N.Y.3d 503 (2005)

    A home health care provider is entitled to notice and an opportunity to be heard before the State acts to recover Medicaid payments it claims were improperly paid when the Department of Health (DOH) regulations provide for such a hearing.

    Summary

    Visiting Nurse Service of New York Home Care (VNS) challenged the New York State Department of Health’s (DOH) recoupment of Medicaid funds, arguing it was not obligated to repay Medicaid unless it received payment from Medicare or another source and that DOH’s procedures lacked an administrative hearing. The court held that DOH’s regulations entitled VNS to a hearing before recoupment. The court reasoned that DOH’s interpretation of “overpayment” to exclude provider liability claims conflicted with the regulation’s plain meaning. The court also found that DOH failed to comply with its own regulatory time frame for conducting hearings, justifying the stay on recoupment pending the hearing.

    Facts

    VNS, a home health care provider, billed Medicaid approximately $1.7 billion for services between October 1993 and September 1998. A review by the Center for Medicare Advocacy (CMA) concluded that $38.2 million should have been reimbursed by Medicare due to dual eligibility. Medicare paid approximately $28.4 million, which VNS refunded to the State. Medicare denied the remaining $10 million in claims due to time elapsed or provider errors, leading to “provider liability” claims. DOH began offsetting these amounts by withholding other Medicaid revenue due to VNS.

    Procedural History

    VNS initiated a CPLR article 78 proceeding challenging DOH’s withholding of Medicaid funds and the lack of an administrative hearing. Supreme Court granted VNS’s petition, holding that VNS had a protected property interest in Medicaid payments requiring a hearing before recoupment. The Appellate Division affirmed, finding VNS entitled to a hearing to determine if reasonable measures were taken to assess Medicare or other third-party eligibility before submitting to Medicaid. The Court of Appeals was certified a question regarding the lower court’s ruling.

    Issue(s)

    Whether a home health care provider is entitled to notice and an opportunity to be heard before the State acts to recover Medicaid payments it claims were improperly paid to the provider.

    Holding

    Yes, because the regulations promulgated by the New York State Department of Health provide that a hearing must be held regarding recoupment of the Medicaid funds in dispute.

    Court’s Reasoning

    The court held that DOH’s regulations, specifically 18 NYCRR 518.5(a), entitled VNS to notice and a hearing before recoupment. The court reasoned that the funds DOH sought to recover fell within the regulation’s broad definition of “overpayment” as “any amount not authorized to be paid under the medical assistance program, whether paid as the result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse or mistake” (18 NYCRR 518.1 [c]). The court rejected DOH’s argument that “overpayment” excluded provider liability claims, stating that courts are not required to embrace a regulatory construction that conflicts with the plain meaning of the promulgated language, citing Matter of 427 W. 51st St. Owners Corp. v Division of Hous. & Community Renewal, 3 NY3d 337, 342 (2004). The Court emphasized that under 18 NYCRR 518.8(b), DOH’s failure to commence the hearing within 90 days of VNS’s request justified the stay on recoupment. The purpose of the hearing is to determine whether VNS reasonably attempted to ascertain and satisfy the requirements of liable third-party payors, as per 18 NYCRR 540.6(e)(6), which states that recoupment is prohibited only with respect to claims for which VNS acted reasonably in both the initial claim submission and subsequent resubmission efforts. The court noted that the burden will be on VNS to prove it acted reasonably. The court declined to address the federal law preclusion argument raised by VNS because VNS did not cross-move to appeal.

  • Gold v. United Health Servs. Hosps., 95 N.Y.2d 683 (2000): Medicaid Recoupment from Infant Settlements

    Gold v. United Health Servs. Hosps., 95 N.Y.2d 683 (2000)

    Medicaid agencies possess independent rights of recovery against third parties for medical expenses paid on behalf of a recipient, and these rights are not limited by restrictions applicable to other forms of public assistance under Social Services Law § 104(2), even when the recipient is an infant.

    Summary

    The New York Court of Appeals addressed whether Social Services Law § 104(2), which limits recoupment from infants receiving public assistance, applies to Medicaid’s recoupment provisions. Two cases were consolidated: one involving lead poisoning and the other involving birth injuries. The court held that Medicaid’s recoupment rights are independent of Section 104(2) due to federal mandates requiring states to seek reimbursement from liable third parties. Thus, Medicaid can seek full recovery from settlements, even those awarded to infants, for medical expenses paid, reinforcing Medicaid as the payor of last resort. The court remanded one case for proper application of CPLR 1206 regarding the allocation of settlement funds for a supplemental needs trust.

    Facts

    In Santiago, an infant, Kimberly, received Medicaid benefits after lead poisoning. Her mother sued the landlord, settling for $140,000. The NYC Department of Social Services asserted a lien to recoup $12,877 in Medicaid benefits. In Gold, Abraham suffered from cerebral palsy due to alleged medical negligence during his mother’s pregnancy, resulting in a $5 million settlement. Since birth, Abraham received Medicaid benefits. Broome County DSS and the NY Office of Mental Retardation asserted liens totaling over $1.7 million.

    Procedural History

    In Santiago, the Supreme Court vacated the City’s lien, but the Appellate Division reversed. The Appellate Division granted leave to appeal to the Court of Appeals. In Gold, the Supreme Court denied the Golds’ motion to reduce the liens proportionally, allocating funds for attorney’s fees, Medicaid liens, a reserve for future medical care, and a supplemental needs trust. The Appellate Division affirmed, and the Golds were granted leave to appeal to the Court of Appeals.

    Issue(s)

    1. Whether Social Services Law § 104(2) limits Medicaid agencies’ ability to recoup expenditures from settlements awarded to infant recipients.
    2. In Gold, whether the trial court properly ordered a reserve for future medical needs instead of directing funds to a supplemental needs trust.

    Holding

    1. No, because Medicaid agencies’ recoupment rights derive from independent statutory provisions related to assignment, subrogation, and recoupment, distinct from Social Services Law § 104(1).
    2. No, because the trial court failed to properly exercise its discretion under CPLR 1206 regarding the allocation of funds, and instead made allocations mathematically without citing statutory authority.

    Court’s Reasoning

    The Court reasoned that federal law mandates states to seek reimbursement for Medicaid expenditures from liable third parties (42 USC § 1396a[a][25][A]-[B]). Medicaid applicants must assign their rights to seek reimbursement to the Medicaid agency (42 USC § 1396k[a][1][A]). The agency is subrogated to the recipient’s rights against third parties (42 USC § 1396a[a][25][H]). Citing Cricchio v. Pennisi, 90 N.Y.2d 296 (1997), the Court emphasized that the right to recover from third parties stems from Medicaid’s provisions, not Social Services Law § 104. The Court distinguished Baker v. Sterling, 39 N.Y.2d 397 (1976), noting that the regulatory scheme had significantly evolved since that decision. Medicaid remains the “payor of last resort.” The Court clarified that Social Services Law § 104(2) still applies when recoupment is sought under Section 104(1) for other forms of public assistance. Regarding the Golds’ argument, the court found the trial court failed to properly exercise its discretion under CPLR 1206, which governs the investment or disbursement of an infant’s recovery, and remitted the case for proper consideration.