STRATFORD NURSING & CONVALESCENT CENTER v. DEPARTMENT OF HEALTH AND SENIOR SERVICES

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6457-04T16457-04T1

STRATFORD NURSING & CONVALESCENT

CENTER,

Petitioner-Appellant,

v.

DEPARTMENT OF HEALTH AND SENIOR

SERVICES,

Respondent-Respondent.

________________________________________________

 

Submitted March 22, 2006 - Decided April 20, 2006

Before Judges Stern and Grall.

On appeal from the final order of the

New Jersey Department of Health and

Senior Services, Docket No. HLT-8756-03.

Marvin Neiman and Associates, attorneys for

appellant (Mr. Neiman, of counsel and on the

brief).

Zulima V. Farber, Attorney General, attorney

for respondent (Michael J. Haas, Assistant

Attorney General, of counsel; Susan J.

Dougherty, Deputy Attorney General, on the

brief).

PER CURIAM

Stratford Nursing & Convalescent Center appeals from the final administrative determination of the Commissioner of the Department of Health and Senior Services, entered on June 21, 2005, which adopted the initial determination of an Administrative Law Judge ("ALJ") in denying reimbursement for legal fees expended in connection with a lawsuit related to the rendering of therapy services. In essence, Stratford contends that since it was required to provide therapy services under the Medicaid program, the legal fees it incurred with respect to litigation relating to those services are "appropriate" and "necessary" expenses which are reimbursable under the program. Conversely, the Department asserts that because the therapy services which were the subject of litigation are "non-reportable, non-allowable expenses" (and Stratford so acknowledges), they are not subject to reimbursement.

We affirm substantially for the reasons expressed in the initial decision of Administrative Law Judge Joseph F. Martone in his written opinion of May 11, 2005. We add only that the record does not contain sufficient information, including the pleadings, with respect to the nature of the litigation and its relationship to the therapy services rendered, to demonstrate that the Commissioner acted arbitrarily, capriciously or unreasonably.

The Department also asserts that because the legal fees exceeded the amount that Stratford spent on the therapy services for the year in question, they cannot be considered ordinary and necessary expenses, or subject to reimbursement. However, in upholding the Commissioner's rejection of the reimbursement request for the year 2002, we need not decide that litigation over non-reportable, non-allowable costs associated with necessary or required therapy services can never be subject to reimbursement despite the nature of the services or the litigation, or that the costs of litigation can never exceed the costs of the rendered services in dispute.

 
The final administrative determination is affirmed.

As the ALJ put it:

In its appeal of its 2002 rates, petitioner challenges the respondent's disallowance of $165,612 in legal expenses incurred in connection with petitioner's litigation with NovaCare, a provider of therapy services. Petitioner acknowledges that, under the Medicaid regulations, therapy services are non-reportable, non-allowable costs. However, it argues that, because facilities such as petitioner's are required by state and federal law to provide such services to Medicaid beneficiaries, the legal fees incurred in the NovaCare legal case should be allowed as reimbursable costs related to the effective operation of its facility.

The regulations have been recodified since the ALJ's initial determination was filed.

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A-6457-04T1

April 20, 2006