September 12, 1993
NEW YORK CITY HEALTH AND HOSPITALS CORPORATION, MEDICAL SOCIETY OF THE STATE OF NEW YORK, SIDNEY FINKEL, and JOHN A. BLESKI, Plaintiffs, and BENEDICTINE HOSPITAL, BETH ISRAEL MEDICAL CENTER, BROOKHAVEN MEMORIAL HOSPITAL CENTER, BUFFALO GENERAL HOSPITAL, CANTON-POTSDAM HOSPITAL, CHAMPLAIN VALLEY PHYSICIANS HOSPITAL MEDICAL CENTER, CLIFTON SPRINGS HOSPITAL & CLINIC, COMMUNITY-GENERAL HOSPITAL OF GREATER SYRACUSE, DE GRAFF MEMORIAL HOSPITAL, EPISCOPAL HEALTH SERVICES, INC., AURELIA OSBORN FOX MEMORIAL HOSPITAL SOCIETY, THE GENESEE HOSPITAL, GLENS FALLS HOSPITAL, A. BARTON HEPBURN HOSPITAL, HIGHLAND HOSPITAL OF ROCHESTER, KINGSBROOK JEWISH MEDICAL CENTER, THE LONG ISLAND COLLEGE HOSPITAL, LONG ISLAND JEWISH MEDICAL CENTER, MAIMONIDES MEDICAL CENTER, NASSAU COUNTY MEDICAL CENTER, NEW YORK EYE & EAR INFIRMARY, NORTHERN WESTCHESTER HOSPITAL CENTER, OSWEGO HOSPITAL, OUR LADY OF VICTORY HOSPITAL, PARK RIDGE HOSPITAL, ST. BARNABAS HOSPITAL, ST. CLARE'S HOSPITAL OF SCHENECTADY, ST. JOSEPH'S HOSPITAL HEALTH CENTER (SYRACUSE), ST. MARY'S HOSPITAL (ROCHESTER), ST. PETER'S HOSPITAL, ST. VINCENT'S MEDICAL CENTER OF RICHMOND, SISTERS OF CHARITY HOSPITAL, STRONG MEMORIAL HOSPITAL, UNION HOSPITAL OF THE BRONX, AND WHITE PLAINS HOSPITAL CENTER, Plaintiffs-Hospital Intervenors, and MIDWOOD AMBULANCE & OXYGEN SERVICE, INC., HUNTER AMBULANCE, INC., APPROVED AMBULANCE & OXYGEN SERVICE, INC., MERCY MEDICAL TRANSPORTATION, INC., TWC AMBULANCE SERVICE, INC., EMPRESS AMBULANCE SERVICE, INC., RICHMOND COUNTY AMBULANCE SERVICE, INC., CITYWIDE AMBULANCE SERVICE, INC., WEIR AMBULANCE, INC., ASSOCIATED AMBULANCE SERVICE, INC., PARK AMBULANCE & OXYGEN SERVICE, INC., BI-COUNTY AMBULANCE SERVICE, INC., STAT EQUIPMENT CORP. d/b/a STAT AMBULANCE SERVICE, MEDIBUS, INC., ROBINSON'S AMBULANCE & OXYGEN SERVICE, INC., METROPOLITAN AMBULANCE & FIRST AID CORP., METRO-NORTH AMBULANCE CO., AA AMBULANCE & OXYGEN SERVICE, INC., ADMIRAL AMBULANCE SERVICE, INC., NATIONAL AMBULANCE & OXYGEN SERVICE, INC., EASTERN AMBULANCE SERVICE, INC., PECONIC AMBULANCE SERVICE, INC., MONROE AMBULANCE, RESPONSE MEDICAL TRANSPORT and CREST AMBULANCE, Plaintiffs-Ambulance Intervenors,
CESAR A. PERALES, as Commissioner of Social Services of the State of New York and LOUIS W. SULLIVAN, as Secretary of the United States Department of Health and Human Services, Defendants.
The opinion of the court was delivered by: MARY JOHNSON LOWE
Before this Court is the motion for contempt filed August 28, 1992 by plaintiffs New York City Health and Hospitals Corporation ("HHC"), Sidney Finkel, and John A. Bleski, seeking to hold the defendant Commissioner of Social Services of the State of New York (the "Commissioner") in civil contempt for failure to comply with the June 3, 1992 Order of this Court. Also before the Court are motions by plaintiffs-hospital intervenors (the "Hospital Intervenors") and plaintiffs-ambulance intervenors (the "Ambulance Intervenors") (collectively, the "intervenors") filed August 28, 1992 and October 30, 1992, respectively, to join the motion for contempt. For the reasons stated below, the motions to intervene are granted. The motion for contempt is granted with respect to those claims that had not expired under the regulatory 90 day limitation period before this Court's June 3, 1992 Order, and is denied in all other respects.
HHC is a New York public benefit corporation created by New York State to operate the City's municipal hospitals. The Hospital Intervenors are hospitals located in New York, and the Ambulance Intervenors are privately owned and operated companies that provide ambulance services in New York. All of the plaintiffs and intervenors provide services for dually eligible and other qualified beneficiaries under the Medicare and Medicaid Acts.
Medicare is a medical insurance program administered by the federal government for persons age 65 or older, and consists of two parts. Medicare Part A pays 100% of reasonable inpatient costs. Medicare Part B pays 80% of other reasonable costs not covered by Part A, including physician and outpatient services. The remaining 20% under Part B is "coinsurance" -- a responsibility of the patient.
Medicaid is a financial assistance program for the poor, jointly administered by the federal government and the States. The States set fee schedules, and health care providers who participate in Medicaid must accept the scheduled fee as payment in full.
New York State altered its practice in 1987. A regulation was effected that limited the State Medicaid program's responsibility for payment of Medicare Part B deductibles and coinsurance. N.Y. Comp. Codes R. & Regs. tit. 18, § 360.7-7.
The regulation effectively stated that health care providers who served dually eligible persons under Medicare Part B would be limited to recovery of the scheduled Medicaid fee for the services rendered. "New York [would] not pay any cost-sharing amounts except . . . when the 80% of reasonable costs or charges that Medicare reimburses amounts to less than the Medicaid rate, [in which case] New York [would] pay the difference." New York City Health & Hosps. Corp. v. Perales, 954 F.2d 854, 856-57 (2d Cir.), cert. denied, 121 L. Ed. 2d 369, 113 S. Ct. 461 (1992).
The regulation also prohibited Medicare providers from recovering from the dually eligible individuals, thus sealing the limitation on providers' reimbursement.
Plaintiffs are health care providers whose ability to recover reasonable charges under Medicare was limited by the regulation. They brought suit on July 10, 1987, claiming that the regulation violated the Medicare Act, 42 U.S.C. §§ 1395-1395ccc, and the Medicaid Act. 42 U.S.C. §§ 1396-1396u. This Court agreed with the defendants' interpretation of the two Acts, and granted their motions for summary judgment and to dismiss on March 18, 1991. Judgment was entered, but was then vacated to permit filing of an amended complaint. The amended complaint was dismissed in April 1991.
Plaintiffs appealed, and the Court of Appeals for the Second Circuit reversed. The Second Circuit disagreed with the defendants' interpretation of the Acts, and held that "a Medicare provider need not be satisfied with inadequate payment, i.e., less than reasonable costs or charges, even when that provider is treating a Medicare patient who happens also to be poor." Perales, 954 F.2d at 860. The Second Circuit reversed and remanded to this Court for entry of judgment in plaintiffs' favor. This Court entered judgment for plaintiff on June 3, 1992.
The Commissioner has complied with the judgment only for services rendered after June 3, 1992. He contends that the June 3, 1992 Order cannot be understood as requiring reimbursement for services rendered prior to the judgment, because that would be retroactive relief barred by the Eleventh Amendment to the federal Constitution. Plaintiffs and the intervenors acknowledge that retroactive relief is barred by the Eleventh Amendment, but they insist that the payments they seek do not constitute retroactive relief. They seek two types of payment in particular: (1) payment for claims that were not submitted until after the Court's June 3, 1992 Order; and (2) payment for claims that were submitted before the June 3, 1992 Order to obtain the partial reimbursement permitted by the regulation.
The June 3, 1992 Order of this Court was "in favor of" the intervenors and "against" the Commissioner, even though the intervenors were not "parties to the action." Id. The motions to intervene are granted.
The Eleventh Amendment
bars lawsuits in federal court where the party seeking compensation must be paid from public funds in the state treasury. Great Northern Life Insurance Co. v. Read, 322 U.S. 47, 88 L. Ed. 1121, 64 S. Ct. 873 (1944); Kennecott Copper Corp. v. State Tax Commission, 327 U.S. 573, 90 L. Ed. 862, 66 S. Ct. 745 (1946). The Supreme Court in Edelman v. Jordan, 415 U.S. 651, 39 L. Ed. 2d 662, 94 S. Ct. 1347 (1974), clarified the relief permissible under the Eleventh Amendment. The Court stated that "a federal court's remedial power, consistent with the Eleventh Amendment, is necessarily limited to prospective injunctive relief . . . and may not include a retroactive award which requires the payment of funds from the state ...
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