GMR LIVING CENTERS INC v. NOVELLO (2002)

Petitioner commenced this proceeding seeking, inter alia, to annul the determination made following a hearing sustaining the recomputation of its Medicaid reimbursement rate after a final audit by the New York State Department of Health. As a result of the final audit, petitioner's interest expenses reported in 1992 and 1993 on a loan providing petitioner with working capital were disallowed. In affirming the determination, respondent found that the loan did not result in any actual cost to petitioner because the 1996 settlement of litigation with the lender resulted in forgiveness of the outstanding debt. Respondent concluded that the audit properly took into account the subsequent settlement in order to correct the reimbursement to reflect petitioner's actual costs (see 10 NYCRR 86-2.2 [d]).

Contrary to petitioner's contention, the determination is not erroneous as a matter of law based on respondent's interpretation of the applicable regulations or respondent's failure to take into account that, as part of the 1996 settlement, petitioner withdrew its claim against the lender for unliquidated damages based on breach of contract. Respondent's interpretation of the applicable regulations here is not irrational or unreasonable (see Matter of Taher v. Novello, 278 A.D.2d 809, 810, 718 N.Y.S.2d 520, lv. denied 96 N.Y.2d 712, 729 N.Y.S.2d 439, 754 N.E.2d 199) and, indeed, is consistent with the “strong, defined public policy of this State to recover public funds improperly received” (Matter of Cortlandt Nursing Home v. Axelrod, 66 N.Y.2d 169, 182, 495 N.Y.S.2d 927, 486 N.E.2d 785, rearg. denied 66 N.Y.2d 1035, 499 N.Y.S.2d 1030, 489 N.E.2d 1304, cert. denied 476 U.S. 1115, 106 S.Ct. 1971, 90 L.Ed.2d 655). Respondent did not err in failing to take into account petitioner's claim for unliquidated damages. It was petitioner's burden at the hearing to show that “the determination of the department was incorrect and that all * * * costs claimed were allowable” (18 NYCRR 519.18 [d] [1]), and petitioner failed to present any evidence of the value of its unliquidated damages claim. Contrary to petitioner's further contention, the determination is supported by substantial evidence (see Matter of High Point Hosp. v. Surles, 218 A.D.2d 874, 875, 630 N.Y.S.2d 391).

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

MEMORANDUM: