MT SINAI MEDICAL CENTER v. EMPIRE BLUE CROSS AND BLUE SHIELD (2001)

Order, Supreme Court, New York County (Barry Cozier, J.), entered October 20, 1999, which, in an action by plaintiffs hospitals against defendant health insurer challenging the latter's calculation of reimbursement rates for ambulatory surgery services provided to defendant's subscribers, dismissed the complaint on the ground of another action pending, unanimously affirmed, without costs.

We reject plaintiff's claim that defendant's CPLR 3211(a)(4) defense was waived as a matter of law under CPLR 3211(e) because it was not asserted in defendant's answer.   Defendant's second affirmative defense, which alleges that the action, styled as one for breach of contract, should be converted to an article 78 proceeding because its gist is a challenge to Commissioner of Health's approval of the reimbursement rates calculated by defendant, gave plaintiffs clear notice of defendant's position that the instant action duplicated the article 78 proceeding against the Commissioner of Health and defendant simultaneously commenced by plaintiffs in New York County but transferred to Albany County.   Given such notice, and given that we agree that the relief sought herein can only be granted in the context of an article 78 proceeding (see, Arnot-Ogden Mem. Hosp. v. Blue Cross, 92 A.D.2d 629, 459 N.Y.S.2d 950) [distinguishing Bassett Hosp. v. Hospital Plan, 89 A.D.2d 240, 455 N.Y.S.2d 416], it is not apparent how plaintiffs were prejudiced by the absence of a defense explicitly invoking the pendency of the article 78 proceeding (cf., Rogoff v. San Juan Racing Assn., 54 N.Y.2d 883, 444 N.Y.S.2d 911, 429 N.E.2d 418).   Indeed, once accepted that plaintiffs are limited to article 78 relief, the pendency of the article 78 proceeding made dismissal of the instant action, as opposed to its conversion to an article 78 proceeding, a foregone conclusion.

Plaintiffs are additionally limited to article 78 relief by the filed rate doctrine (see, Minihane v. Weissman, 226 A.D.2d 152, 640 N.Y.S.2d 102).