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Hollander v. Brezenoff

April 10, 1986

EUGENE HOLLANDER, PLAINTIFF-APPELLANT,
v.
STANLEY BREZENOFF, COMMISSIONER OF THE DEPARTMENT OF SOCIAL SERVICES OF THE CITY OF NEW YORK, DEFENDANT-APPELLEE



Eugene Hollander appeals from an order of the United States District Court for the Southern District of New York (Lasker, J.) entered April 13, 1984 which granted the motion of Stanley Brezenoff, Commissioner of New York State Department of Social Services, for summary judgment pursuant to Fed. R. Civ. P. 56 dismissing appellant's complaint as time-barred.

Author: Cardamone

Before: OAKES, CARDAMONE and PIERCE, Circuit Judges

CARDAMONE, Circuit Judge:

On this appeal we must determine whether a three-year or a six-year limitations period governs claims against a local social services agency by a nursing home operator for medical services provided to financially assisted patients. Federal and state legislation provide for the delivery of medical services to the impoverished. Signing a provider agreement does not convert statutory mandates to a contract claim.

Eugene Hollander appeals from an order of the United States District Court for the Southern District of New York (Lasker, J.) dated April 13, 1984, which granted the motion of Stanley Brezenoff, Commissioner of the Department of Social Services of the City of New York, for summary judgment pursuant to Fed. R. Civ. P. 56, and dismissed his complaint as time-barred. The district court based its decision on two findings: first, that appellant's claims were subject to New York's three-year statute of limitations for actions arising from statutorily-created rights, CPLR § 214(2); and second, that these claims accrued outside the limitations period and were time-barred. On appeal appellant argues that a six-year contract limitations period should apply and that since triable issues of fact were presented regarding the dates when appellant's claims accrued, summary judgment was improper. We affirm.

I FACTS

A. Background

Congress enacted the Medicaid program to provide federal financial assistance to the states to cover the cost of necessary health care for impoverished persons. Each participating state is required to develop its own plan of implementation which must conform to the governing federal statute and regulations. In New York State, the Department of Social Services (DSS) processes the claims of New York City providers of medical care for Medicaid reimbursement, pays all valid claims, and thereafter seeks reimbursement from the federal government and New York State for their respective 50 and 25 percent shares of the cost.

To receive reimbursement a health care provider such as Hollander must submit an invoice within 90 days of providing the service, showing that allowable medical services were rendered to an eligible individual. After the invoice is submitted, the provider receives up to 95 percent of the invoice amount and the claim is audited. If the claim is allowed, the additional amount due is then paid. If disallowed, in whole or in part, the amount owed the City as a result of the disallowance is deducted from subsequent payments due the provider. The provider is then notified of the basis for rejection, permitted to remedy the problem, and allowed to "reclaim" or resubmit the invoice within 30 days. Medicaid invoices are normally processed by the local agency within 60 to 90 days after submission, though some may take six months. Invoices not processed within six months are considered lost and must be resubmitted by the provider.

B. Proceedings Below

The instant action was instituted on March 23, 1981 against appellee Brezenoff, as Commissioner of the DSS. Appellant is a former licensed operator of several nursing homes that provide nursing services to patients, including those eligible for medicaid assistance under the provisions of Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq. (1982), and Title XI of Article 5 of the New York Social Services Law, §§ 363 et. seq. (The New York Medicaid Program). From 1970-1976 appellant provided medical services to these financially assisted patients and submitted reimbursement requests for the services rendered. Hollander claims that he was under-compensated by $616,000 and the instant litigation was brought to recoup these funds. Two theories of relief are asserted. Under the first, appellant claims that his due process rights were violated by appellee when he was denied a predeprivation hearing. The second alleges that the appellee's actions violated the reimbursement provisions of the Social Security Act and the New York Medicaid Program. The appellees asserted counterclaims for approximately $91,000.*fn1

Appellant attributed his inadequate reimbursement to two actions by the Secretary which he described as improper "deductions" from Medicaid reimbursements and "reclaims I submitted to defendant which were never processed." Hollander did not dispute that the improper deductions totalled $205,615.16, that each deduction occurred prior to 1977 and that he was notified of the deductions when they occurred. As to the rejected claims amounting to $338,672.81--for which reclaims were allegedly submitted--appellant states that the documents he produced "indicated the dates upon which all of the claims for which reclaims were filed were rejected or denied." Despite this assertion, appellant failed to identify a rejection date of any disputed invoice, indicating only the dates when he submitted them.

By affidavit furnished by the Chief Accountant in the Division of Medical Payments of the City Medicaid Program evidence was submitted that the local agency had rejected all of Hollander's claims well before March 23, 1978, the latest date when a claim could have remained viable under a three-year statute of limitations. He noted that the latest date that any of Hollander's claims would have been processed (i.e., accepted or rejected after audit) was six months after May 1976, which was the latest date appellant claims he submitted an invoice, unless an invoice had been lost. There is no claim that any invoice for which reimbursement was sought had been lost; Hollander alleged instead that these invoices had been improperly rejected.

In August 1983 the Commissioner moved for summary judgment arguing that the entire claim was barred by New York's three-year limitation period for statutory claims. Appellant responded that his claim arose from the "Provider Agreements" that Hollander had entered into with the DSS, and as such, its claim was contractual in nature and entitled to a six-year limitations period under CPLR § 213(2). Appellant also alleged a factual dispute as to whether the DSS processed the invoices submitted to it for reimbursement within six months, the DSS informed appellant of DSS action within six months of submission, and the DSS notified appellant that a claim was rejected ...


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