New York City Health & Hospitals Corp. v. Hilton

OPINION OF THE COURT

Order entered June 27, 1985 reversed, without costs, motion granted, and the third-party complaint is dismissed, without prejudice to defendant’s right to pursue any available administrative remedies against appellant.

This lawsuit was instituted by the New York City Health & Hospitals Corporation to recover for medical services rendered to defendant Brenda Hilton in September 1982. Defendant answered, and brought a third-party action against the New York City Department of Social Services (DSS), the agency charged with determining eligibility for medical assistance benefits. The third-party complaint alleges, inter alia, that prior to being hospitalized, defendant Hilton applied to DSS for medical assistance; that the agency negligently failed to process defendant’s application and to notify defendant of her eligibility status; that the medical services provided by the plaintiff hospital "were services covered by Medicaid”, and that but for the agency’s negligence the charges "would have been paid for by Medicaid, and no obligation would have accrued to [defendant Hilton]”.

In lieu of answering, DSS moved to dismiss the third-party action for want of subject matter jurisdiction. Special Term denied the dismissal motion and DSS now appeals.

We reverse. The relevant provisions of the Social Services Law require that the initial determination of an applicant’s eligibility for medical assistance be made by the local agency (Social Services Law § 366-a [6]), and if the applicant is dissatisfied with the determination or if no determination is made within 30 days of the application, he can appeal to the State Commissioner of Social Services and request a fair hearing (Social Services Law § 22; 18 NYCRR 358.4). The fair hearing procedure in turn is judicially reviewable in the Supreme Court by a CPLR article 78 proceeding (Social Services Law § 22 [9] [b]), which constitutes the exclusive vehicle for such judicial review (People ex rel. Ninesling v Nassau County Dept. of Social Servs., 46 NY2d 382, 386; Matter of Leonora M., 104 *145AD2d 755). A plenary suit will not lie to review the agency’s action or failure to act (Matter of Leonora M., supra; Gorman v Gorman, 77 Misc 2d 687; cf., Calvary Hosp. v D’Elia, 95 AD2d 817).

Though it is (artfully) styled in terms of a negligence claim, the third-party action herein is clearly brought to review and correct the agency’s failure to render a determination on defendant Hilton’s Medicaid application. Viewed in its proper perspective, the claim against the agency necessarily hinges on defendant’s entitlement to public assistance, a matter to be determined in the first instance through administrative, not judicial review. To permit defendant to pursue such a determination in the context of the within impleader action would improperly extend the jurisdiction of the Civil Court and unwisely immerse the court in issues patently within the expertise of the administrative body.

Society of N. Y. Hosp. v Blake (73 Misc 2d 305), relied upon by the dissent, is factually distinguishable. The record in Blake conclusively established, and it was not seriously disputed, that the defendant and third-party plaintiff therein was eligible for medical assistance at the time she was hospitalized and that the agency erred in denying defendant’s Medicaid application and ignoring her request for fair hearing review. In contrast the record before us contains little more on the critical question of eligibility than defendant’s bare assertion that she was and is "indigent”. Thus, unlike Blake, there exists here an open question as to the agency’s responsibility for covering defendant’s medical expenses, a question not ripe for judicial review.

Mindful of the equitable concerns voiced by the dissent, we direct that in the event plaintiff ultimately secures judgment on its main action, the enforcement thereof be stayed pending a final administrative determination on defendant’s application for medical assistance.*

(dissenting). I respectfully dissent and would affirm the order of the court below.

The facts of this case while not exactly on point are remarkably similar to Society of N. Y. Hosp. v Blake (73 Misc 2d 305). *146In Blake, the Department of Social Services (DSS) argued that the defendant failed to exhaust her administrative remedies, notwithstanding the fact that the defendant had requested a hearing and never received a response. In the case before us, the respondent Ms. Hilton was never informed whether her application was accepted or rejected. DSS, nevertheless, contends that the respondent Ms. Hilton failed to exhaust her administrative remedies and that as a consequence of her failure to so act, the Statute of Limitations has expired. The Department’s interpretation must, therefore, be that notwithstanding the fact that the respondent may be entitled to payment pursuant to the Social Services Law, that in effect, she has no remedy. This analysis is untenable and unconscionable. In addition, DSS in its affirmation in support of its motion to dismiss the defendant’s third-party complaint does not dispute the defendant’s contention that she was never informed whether her application had been accepted or rejected. Nor does DSS dispute the defendant’s contention that she was not informed of her right to request a fair hearing. Pursuant to section 22 of the Social Services Law, the defendant is entitled to a fair hearing where there has been a failure to act upon her application within 30 days of filing. DSS has failed to comply with either section 366-a or section 22 of the Social Services Law. Furthermore, pursuant to CPLR 217, an article 78 proceeding must be commenced within four months of a final determination. There has been no determination, not to mention a final determination. The defendant should be allowed to implead DSS as a matter of law.

It would be a waste of time and effort to expect the defendant or persons similarly situated to appreciate or interpret the laws pertaining to Medicaid and social services when the very agency administering the laws does not appear to fully understand them. The decision of the majority to reverse the Civil Court will, in effect, relegate the defendant and others similarly situated to a perpetual "Catch-22”. I would also affirm as a matter of public policy, for the reasons stated by Justice Sandler, in Blake (supra, at 308):

"What is quite plain is that it would result in a grave injustice to Blake and to many other intended beneficiaries of the Medicaid program for this court to conclude that the only remedy for the kind of problem presented is to be found in an article 78 proceeding. The social realities of the basic situation almost guarantee that many victims of administrative errors *147will not comply with the four-month time requirement for such proceedings. (CPLR 217.)

"The intended beneficiaries of the Medicaid program are poor people, of limited resources, not likely to have ready access to lawyers, or to be sensitively aware of when they require legal advice or help. The administrative rejection of a Medicaid application does not have the kind of immediate impact that sends people scurrying for legal help. The significance of the rejection and the need for legal assistance become apparent only when an action is commenced by the hospital and the patient is faced by the grim prospect of a heavy judgment far beyond his financial capacity to pay. It is at that point, usually long after the time for article 78 has expired (as in this case), that lawyers or legal service groups are contacted for the first time.

"Moreover, it is apparent that the issue is not simply a two-party contest between a patient and the Department but requires the adjudication of the rights and responsibilities of the supplier of medical services as well.”

This case and others with similar fact patterns do not contain amorphous issues. This sort of case lends itself to a simple resolution. Neither the Department of Social Services, nor the courts need to be bogged down with unnecessary litigation. A simple resolution of such matters would be consistent with the intent of the social services laws, the public policy of the State of New York and concomitantly the purpose behind the implementation of the Individual Assignment System (IAS) of the Unified Court System.

I would, therefore, affirm the decision of the Civil Court as a matter of law and public policy.

Parness and Ostrau, JJ., concur; Sandifer, J. P., dissents in a separate memorandum.