Opinion
80312/2010.
Decided July 8, 2011.
The following papers numbered 1 to 4 were used on this motion this 10th day of May, 2011:
[001] Notice of Petition (Petitioner) (Affirmation in Support) 1 [002] Notice of Motion to Dismiss (Respondent) (Affirmation in Support) 2 Affirmation in Opposition to Motion to Dismiss (Petitioner) (Affirmations/Affidavits in Support) 3 Reply Affirmation in Support of Motion to Dismiss (Respondent) (Affirmations/Affidavits in Support) 4Petitioner commenced this article 78 proceeding, pursuant to CPLR § 7803(3), seeking to "annul, reverse and declare invalid the determination" of respondent CareCore National, LLC, [hereinafter "CareCore"] which denied petitioner Staten Island Physician Practice [hereinafter "SIPP"] certification to provide radiological services to patients that are members of Oxford, Aetna and Health Net health insurance plans. This petition was commenced on or about October 22, 2010.
The following is undisputed: SIPP is a private multi-disciplinary medical practice that provides health care services to patients on Staten Island. Respondent CareCore is a private company that manages certain benefits for health plans that contract for its service. In the instant case, Aetna Health, Inc. [hereinafter "Aetna"], Oxford Health Insurance [hereinafter "Oxford"], Health Insurance Plan of New York [hereinafter "HIP"] and Health Net of New York and Health Net Insurance of New York [hereinafter collectively "Health Net"] all entered into contracts with respondent CareCore to manage their, inter alia, radiology benefits. CareCore receives, processes and analyzes applications from providers seeking certification by health plans to provide certain services (i.e. radiology treatments) to the health plans members. CareCore analyzes the applications, in accordance with the contracts (usually for geographic need and cost-based analysis) and presents its recommendations regarding whether the applying provider should be certified to the health plans. The health plans in this case all entered into contracts with CareCore whereby they each paid a flat-fee (per-member, per-month) in exchange for CareCore reimbursing these certified providers for treatment. The instant case surrounds the denial of certification by CareCore, of SIPP's radiological services to patients who are members of Aetna, Oxford and Health Net. Patients who are members of HIP health insurance were certified by CareCore, over CareCore's recommendation to deny certification.
It is undisputed that SIPP applied to be certified by CareCore as a participating provider for HIP, Oxford, Aetna and Health Net, approximately four times in the last five years. SIPP applied for participating provider status regarding its radiological services at its Hylan Boulevard and Clove Road facilities and was denied certification with respect to Oxford, Aetna and Health Net, but was approved for certification with respect to HIP. SIPP reapplied for both facilities a number of times throughout the next five years and received the same determination. SIPP appealed and the previous determinations were affirmed on July 1, 2010. SIPP filed this petition on or about October 22, 2010.
Initially the court finds respondent's contentions that this proceeding is beyond the four month statute of limitations, unavailing. Proceedings brought under CPLR article 78 must be commenced within four months "after the determination to be reviewed becomes final" ( Matter of Level 3 Communications, LLC v DeBellis, 75 AD3d 164, 174 [2d Dept., 2010]). A determination becomes final after the petitioner has exhausted all administrative remedies ( Town of Oyster Bay v. Kirkland , 81 AD3d 812 , 815 [2d Dept., 2011][holding that "[g]enerally, one who objects to the act of an administrative agency must exhaust available administrative remedies before being permitted to litigate in a court of law" and "absent extraordinary circumstances, courts are constrained not to interject themselves into ongoing administrative proceedings until final resolution of those proceedings before the agency'"]). Here, the determination which petitioner is seeking this court to review became final on July 1, 2010. As this petition was commenced on or about October 22, 2010, the court finds the petition timely.
While it is undisputed that the appeal for the previous applications by SIPP was denied on July 1, 2010, there is no indication that SIPP cannot continue to apply in the future, as circumstances may change.
Next, this court will address whether this claim is cognizable under article 78. SIPP commenced this special proceeding under CPLR § 7803(3), which provides;
[t]he only question that may be raised in a proceeding under this article are:
3. [w]hether a determination was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion, including abuse of discretion as to the measure or mode of penalty or discipline imposed.
CPLR § 7802 (a) defines the scope of relief as against a "body or officer" which is inclusive of "every court, tribunal, board, corporation, officer or other person, or aggregation of persons, whose action may by affected by a proceeding under this article". Generally, article 78 relief is reserved for governmental agencies, however, there are rare exceptions where the dispute is between a member or employee of the non-governmental organization and the organization itself and where the organization has powers, akin to a government, to affect the rights of a constituent, member, employee or persons who, by the government mandate are subject to the powers of the body ( In the Matter of the Application of Okslen Acupuncture P.C. v. Dinallo, 25 Misc 3d 637, 641-642 [New York Cty., 2009]; Siegel, David, D., New York Practice § 557 [4th Ed. 2005]).
Courts have extended article 78 relief against private corporations in a rare instance: for example, cooperative apartment boards ( Matter of Schapira v. Grunberg, 11 Misc 3d. 1063A [Bronx Cty., 2005]), country club board of directors ( Goldin v. Engineers Country Club , 54 AD3d 658 , 659 [2d Dept., 2008]), yacht club board of governors ( Matter of Kelly v. Northport Yacht Club , 44 AD3d 858 , 858 [2d Dept., 2007]), and not-for-profit nursing homes ( Goldman v. White Plains Center for Nursing Care , 9 Misc 3d 977 [NY Cty., 2005]). However, in all of the prior instances the courts found article 78 relief available to those petitioners who were members or employees of the respective respondents because the legislative intent was to ensure private corporations not only comply with federal/state/municipal statutes but also their own internal rules and regulations with respect to employees or members ( Matter of Schapira v. Grunberg, 11 Misc 3d 1063A [Bronx Cty., 2005]; Goldman v. White Plains Center for Nursing Care , 9 Misc 3d 977 [NY Cty., 2005]).
Here, the court finds this claim not cognizable under article 78. It is undisputed that both petitioner and respondent are private for-profit companies. In addition, there is no employment or contractual relationship between the parties. Courts have declined to extend article 78 relief where there is not some quasi-governmental body allegedly violating a statute or internal rule. CareCore maintains a contractual relationship with the health plans, not SIPP, to make geographical recommendations with respect to certain medical services. The health plans pay CareCare a monthly fee to reimburse those providers which are certified by CareCore and accepted by the health plan. While CareCore's recommendation to Aetna, Oxford and Health Net, is taken into consideration in determining whether to certify a participating provider in a given medical area, the affidavits provided by respondent by James Gillen, Vice President at United Healthcare (Oxford is a United Healthcare company) and Donald R. Ryan, Chief Executive Officer of CareCore, support the fact that CareCore's recommendation is just that: a recommendation, and that "Oxford can then accept or reject CareCore's recommendations" (Affidavit of James Gillen, para. 6). Further evidencing that article 78 relief is inappropriate is the fact that CareCore cannot compel, or prevent, the health plans from accepting or rejecting SIPP's radiological services even if CareCore recommended certification. As Mr. Gillen stated, the health plans are free to accept or reject CareCore's recommendations at any time. As a result, this court finds these claims are not cognizable under article 78.
As indicated by Mr. Ryan, HIP in fact did override the determination by CareCore to not certify SIPP, which is why HIP was certified and Aetna, Oxford and Health Net were not, as they accepted CareCore's determination.
While academic, the court notes that no evidence has been presented to establish that respondent's determination not to certify SIPP's radiological services for patients insured by Aetna, Oxford or Health Net, as opposed to HIP, was arbitrary and capricious. It is well settled "that in CPLR article 78 proceedings courts examine whether the action taken by the agency has a rational basis and will overturn that action only where it is taken without sound basis in reason or regard to the facts or where it is arbitrary and capricious" ( Matter of Ignizio v. City of New York, ___ AD3d ___, NY Slip Op. 5708 [2d Dept., June 28, 2011]). Further, "[i]t is not the province of the courts to second-guess thoughtful agency decisionmaking and, accordingly, an agency decision should be annulled only if it is arbitrary, capricious or unsupported by the evidence" ( id.).
Here, CareCare is bound by its contractual obligations with the health plans. Mr. Gillan, Vice President of United HealthCare, stated that
[u]nder Oxford's contract with CareCore, CareCore is required to maintain a network of diagnostic imaging providers that meets state law access requirements as well as the specific geographic access requirements set forth in our contract. When CareCore receives a request from an imaging provider who wants to contract with CareCore for Oxford's network, CareCore must determine whether the provider is required to meet these standards.
Mr. Gillan further states that "[a]s part of this review, CareCore, among other things, performs a geographic need analysis to determine whether the Oxford provider network already has other contracted providers in the geographic location of the applicant's facility". CareCore provided evidence that it performed a geographical assessment of SIPP's radiological services in the same manner it did with other provider requests, namely,
[t]o perform the geographic need analysis, CareCore places the applicant's facility on a pin map, and then adds to the map the current contracted providers within a designated radius. As described above, the distance used to determine geographic need is provided for in the risk agreements, and varies by county. Under the relevant contracts, for Richmond County, a 2.5 mile radius is used as the measuring stick. This means that, if there is at least one contracted provider within 2.5 miles of an applicant offering similar services, there is no geographic need in the network for that applicant's services.
This court's review of the pin map reveals between two and five providers within the designated 2.5 mile radius providing services that petitioner contends are "notable" to its practice.
These procedures, as indicated in the petition, are magnetic resonance imaging (MRI), computer axial topography (CAT or CT) scanning, diagnostic x-ray, digital mammography, dual energy x-ray absorptiometry (DEXA) scanning, cardiac stress testing, echocardiography, ultrasound and nuclear medicine.
SIPP's petition seeks to compel CareCore to apply the same criteria' used to certify HIP, to Aetna, Oxford and Health Net, however, the court finds this argument without merit. There is no indication that CareCore used a different analysis on the HIP application verses the Aetna, Oxford or Health Net application. This court finds that CareCore's determination was made in accordance with its contractual obligations and internal procedures for assessing geographic need and cost-based analysis. There is no evidence that CareCore arbitrarily determined not to certify Aetna, Oxford and Health Net, in fact, it also recommended to not certify HIP but HIP overrode it is recommendation and certified SIPP regardless. While academic, this courts notes that CareCore's determination was not arbitrary and capricious or made without full knowledge of the facts and is, in fact, reasonable.
This court recognizes SIPP's magnanimous arguments that it seeks to provide comprehensive diagnostic care to residents of Staten Island and made a substantial monetary investment into its radiological department in anticipation of doing so, however, this is not a valid argument to warrant article 78 relief.
Accordingly, it is hereby,
ORDERED that the petition is hereby denied, and it is further
ORDERED that the respondent's motion [002] to dismiss is hereby granted, and it is further
ORDERED that the Clerk enter Judgment accordingly.
THIS IS THE DECISION AND ORDER OF THIS COURT.