A NURSING HOME CAN BRING A PLENARY ACTION SOUNDING IN BREACH OF CONTRACT AGAINST THE AGENCY WHICH DENIED MEDICAID COVERAGE FOR A RESIDENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff nursing home (Kings Harbor) properly brought a plenary action against the agency which denied Medicaid coverage for a resident. Plaintiff’s remedy was not limited to bringing an Article 78 proceeding on behalf of the resident. The action against the agency properly sounded in breach of contract:

“It is well established that a nursing home may, as here, bring a plenary action in its own right against the agency designated to determine Medicaid eligibility” … . The plaintiff’s “private financial interest in recovering expenditures rendered creates a relationship of purchaser and seller, thereby permitting it to bring a plenary action in its own right against the governmental agency designated to declare eligibility” … .

Furthermore, the plaintiff is not bound by the resident’s failure to exercise his separate right to an administrative appeal of the denial of Medicaid benefits … . Thus, the authorizations executed by the resident allowing the plaintiff to represent him “in all matters pertaining to [his] Medicaid Assistance application and follow up activities” did not impair the plaintiff’s right to commence its own plenary action independent from the pursuit of administrative review … .

“[I]nasmuch as [the] plaintiff was not bound by the administrative determination denying the [resident’s] application for medical assistance, and has commenced a plenary action in its own right, [the] plaintiff is not bound by the four-month Statute of Limitations contained in CPLR 217” … . * * *

… [T]he purchaser/seller relationship between a nursing home provider and the governmental agency designated to declare Medicaid eligibility is construed as a contractual relationship, the alleged breach of which gives rise to a breach of contract cause of action … . Kings Harbor Multicare Ctr. v Townes, 2024 NY Slip Op 05093, Second Dept 10-16-24

Practice Point: An action by a nursing home against the agency which denied Medicaid coverage for a resident sounds in breach of contract and is properly brought as a plenary action, not as an Article 78 proceeding.