Prior Owner of a Nursing Home Did Not Have Standing to Seek Payments from Medicaid for the Period During His Ownership—Only the Current Owner/Operator of the Nursing Home Had Standing

The Third Department determined petitioner, the former owner of a nursing home, did not have standing to seek payments from Medicaid for the period before petitioner sold the nursing home.  Only the current operator of the nursing home has standing to seek Medicaid payments. The court noted that petitioner had protected his interest in the payments by contract with the new owner of the nursing home:

Standing requires a party to demonstrate both an injury-in-fact and an injury falling “within the zone of interests or concerns sought to be promoted or protected by the statutory provision under which the agency has acted” … . Petitioner has clearly demonstrated an injury-in-fact particularly since it initiated the rate appeal while it was still the owner/operator … . The more difficult question is whether petitioner meets the zone of interests component as a former owner/operator. Our review shows that the governing statute and regulations contemplate the payment of Medicaid reimbursement to the current provider of medical services or the current operator of a nursing home facility. Specifically, Social Services Law § 367-a (1) (a) mandates that all payments “shall be made to the person, institution, state department or agency or municipality supplying such medical assistance” and expressly prohibits the assignment of a reimbursement claim to a third party. This legislation was designed to “relieve DOH from the potential liability and increased administrative burdens involved in such assignments” (Legislative Mem, 1971 McKinney’s Session Laws of NY at 2419-2420…). Correspondingly, nursing home facilities qualify for Medicaid payments provided that they possess a valid operating certificate issued by the Commissioner (see Public Health Law § 2801 [2], [3], [4] [b]; 10 NYCRR 86-2.1 [a]). An operating certificate “shall only be used by the established operator for the designated site or operation” (10 NYCRR 401.2 [b]). When, as here, the owner/operator sells a facility to a party who intends to continue operating the facility, it may transfer the operating certificate to the new operator only upon approval of the Public Health Council (see 10 NYCRR 401.3 [c]). Read together, these provisions establish that it is the current operator of a nursing home facility — i.e., the holder of a valid operating certificate — that is entitled to receive Medicaid payments and, thus, is the protected party within the statutory zone of interest. Matter of Park Manor Rehabilitation & Health Care Ctr., LLC v Shah, 2015 NY Slip Op 04909, 3rd Dept 6-11-15