        SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

273
TP 11-01893
PRESENT: SMITH, J.P., FAHEY, LINDLEY, AND MARTOCHE, JJ.


IN THE MATTER OF MARY SCHERZ AND PACE CNY, A
PROGRAM OF ALL-INCLUSIVE CARE FOR THE ELDERLY,
PETITIONERS,

                    V                             MEMORANDUM AND ORDER

NEW YORK STATE DEPARTMENT OF HEALTH AND
ONONDAGA COUNTY DEPARTMENT OF SOCIAL SERVICES,
RESPONDENTS.


HANCOCK ESTABROOK, LLP, SYRACUSE (JANET D. CALLAHAN OF COUNSEL), FOR
PETITIONERS.

PAULA MALLORY ENGEL, SYRACUSE, FOR RESPONDENT ONONDAGA COUNTY
DEPARTMENT OF SOCIAL SERVICES.

ERIC T. SCHNEIDERMAN, ATTORNEY GENERAL, ALBANY (KATHLEEN M. TREASURE
OF COUNSEL), FOR RESPONDENT NEW YORK STATE DEPARTMENT OF HEALTH.


     Proceeding pursuant to CPLR article 78 (transferred to the
Appellate Division of the Supreme Court in the Fourth Judicial
Department by order of the Supreme Court, Onondaga County [John C.
Cherundolo, A.J.], entered June 28, 2011) to review a determination of
respondent New York State Department of Health. The determination
denied petitioners’ application for Medicaid benefits.

     It is hereby ORDERED that the determination is unanimously
confirmed without costs and the petition is dismissed.

     Memorandum: Petitioner Mary Scherz commenced this CPLR article
78 proceeding challenging the determination of the New York State
Department of Health (respondent) to deny the claims for Medicaid
reimbursement for medical care that was provided to Scherz by PACE
CNY, a Program of All-Inclusive Care for the Elderly (PACE). After
Supreme Court granted the cross motion of Scherz to amend the petition
to add PACE as a necessary party, PACE and Scherz, now the two
petitioners, submitted an amended petition seeking the same relief.
The matter was transferred to this Court pursuant to CPLR 7804 (g).

     Initially, we note that this proceeding does not involve a
substantial evidence issue, and thus the court erred in transferring
the proceeding to this Court (see CPLR 7803 [4]; 7804 [g]; Matter of
Panek v Bennett, 38 AD3d 1251, 1252). A substantial evidence issue
“arises only where a quasi-judicial hearing has been held and evidence
                                 -2-                             273
                                                           TP 11-01893

[has been] taken pursuant to law” (Matter   of Gigliotti v Bianco, 82
AD3d 1636, 1638 [internal quotation marks   omitted]) and no hearing was
held or required in this case (see id.).    We nevertheless address the
merits of petitioners’ contentions in the   interest of judicial economy
(see Panek, 38 AD3d at 1252).

     “ ‘[J]udicial review of an administrative determination is
limited to whether the administrative action is arbitrary and
capricious or lacks a rational basis’ ” (Matter of Walker v State
Univ. of N.Y. [Upstate Med. Univ.], 19 AD3d 1058, 1059, lv denied 5
NY3d 713; see generally Matter of Pell v Board of Educ. of Union Free
School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester
County, 34 NY2d 222, 230-231), and an administrative agency’s
interpretation “of its own regulations is entitled to substantial
deference and should be upheld unless it is without a rational basis”
(Matter of Choices Women’s Med. Ctr. v McBarnette, 217 AD2d 623, 624;
see generally Matter of Violet Realty, Inc. v City of Buffalo Planning
Bd., 20 AD3d 901, 902, lv denied 5 NY3d 713).

     Insofar as relevant here, respondent’s regulations require that
all claims for reimbursement of payments made by PACE must be finally
submitted to respondent within two years from the date upon which the
care, services or supplies were furnished (see 18 NYCRR 540.6 [a] [3]
[i]), hereinafter referred to as the two-year rule. Furthermore,
respondent’s publications indicated that respondent would consider
waiving the two-year rule in cases where, as here, it had erroneously
denied a claim, but only in the event that a request for such a waiver
was submitted within 90 days of the issuance of respondent’s
“remittance statement” establishing that the claim had been improperly
denied. Here, respondent initially denied PACE’s claims due to a
computer coding error, and when PACE continued to resubmit the claims
after two years had passed, respondent relied upon the two-year rule
in denying PACE’s re-submitted claims. Respondent eventually conceded
the error and issued a “remittance statement” in June 2009. PACE
concedes that it did not resubmit the claims with a request for a
waiver of the two-year rule until approximately March 2010. The
evidence in the record establishes that petitioners had notice of
respondent’s rules and exceptions thereto.

     Contrary to the contention of petitioners, respondent’s
determination was neither erroneous nor arbitrary and capricious. The
record establishes that PACE did not, inter alia, submit its request
for a waiver of the two-year rule within the requisite 90 days after
it received the “remittance statement” in which respondent conceded
that its prior denial had been erroneous. Consequently, we conclude
that respondent’s determination was in conformance with its regulation
and thus was not arbitrary and capricious or without a rational basis.
We need not address the parties’ remaining contentions in light of our
determination.


Entered:   March 23, 2012                         Frances E. Cafarell
                                                  Clerk of the Court
