IN RE: PEOPLE CARE INCORPORATED (2025)

Order and judgment (one paper), Supreme Court, New York County (Arlene P. Bluth, J.), entered on or about March 13, 2024, which denied the petition to annul the August 4, 2023 determination of respondent Contract Dispute Resolution Board (CDRB) finding that respondent Human Resources Administration (HRA) properly sought recoupment of Health Care Reform Act (HCRA) funds that went unspent by petitioner (People Care) during the fiscal years that the funds were received, and dismissed this proceeding brought pursuant to CPLR article 78, unanimously affirmed, without costs.

CDRB's determination was not arbitrary and capricious or affected by an error of law (CPLR 7803[3];  Matter of Pell v. Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 N.Y.2d 222, 231, 356 N.Y.S.2d 833, 313 N.E.2d 321 [1974]).  In prior litigation brought by People Care arising from the same contract and the same effort by HRA to recoup funds that went unspent during fiscal years 2003 and 2004, the Court of Appeals held that “funds for personal care services paid to petitioner People Care Inc. under the Health Care Reform Act ․ are Medicaid funds subject to the audit and recoupment authority of ․ [ ]HRA[ ] in accordance with the parties’ 2001 contract” (Matter of People Care Inc. v. City of N.Y. Human Resources Admin., 36 N.Y.3d 1088, 1090, 143 N.Y.S.3d 329, 167 N.E.3d 497 [2021], revg 175 A.D.3d 134, 106 N.Y.S.3d 32 [1st Dept. 2019], citing Public Health Law § 2087–v[1][bb][i], [iii];  accord Matter of City of New York v. Contract Dispute Resolution Bd. of the City of N.Y., 202 A.D.3d 532, 533, 164 N.Y.S.3d 71 [1st Dept. 2022];  Matter of New York Health Care, Inc. v. City of N.Y. Human Resources Admin., 201 A.D.3d 474, 475, 156 N.Y.S.3d 834 [1st Dept. 2022]).  The Court of Appeals expressly adopted the reasons stated in the dissenting opinion of this Court (Matter of People Care Inc., 36 N.Y.3d at 1089, 143 N.Y.S.3d 329, 167 N.E.3d 497), that because “HCRA funds are merely a subset of the contractual Medicaid funds,” they “are subject to annual auditing and recoupment by [HRA]” (Matter of People Care Inc., 175 A.D.3d at 150, 150, 152, 106 N.Y.S.3d 32 [1st Dept. 2019, Richter, J., dissenting]).  Thereafter, in a similar matter concerning another personal care provider whose contract was “nearly identical” to People Care's contract herein, this Court held that “the annual auditing and recoupment of Medicaid funds left unspent during each fiscal year is in accordance with the parties’ 2001 contract” (Matter of City of New York, 202 A.D.3d at 533–534, 164 N.Y.S.3d 71 , citing Matter of People Care, 36 N.Y.3d at 1090, 143 N.Y.S.3d 329, 167 N.E.3d 497).  As People Care admits that it did not spend the funds during the fiscal years received, the challenged CDRB determination comports with this binding precedent.

Contrary to People Care's contention, CDRB rationally found that HRA may seek recoupment even though People Care alleged that it spent the 2003 and 2004 funds in later years but before the audit.  The status of the funds as Medicaid funds establishes that they were “subject to annual auditing and recoupment by [HRA], since they are subject to the same rules and procedures applicable to all other Medicaid funds, including the authority of HRA ․ to audit and recoup excess HCRA funds paid to providers” (Matter of City of New York, 202 A.D.3d at 533, 164 N.Y.S.3d 71 [internal quotation marks omitted]).  Moreover, the record shows that People Care first claimed to have already spent the funds at issue in its June 7, 2021 appeal of the audit.

We have considered People Care's remaining contentions and find them unavailing.