Raes Pharmacy, Inc. v. Perales

181 A.D.2d 58, 586 N.Y.S.2d 579, 1992 N.Y. App. Div. LEXIS 8145
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJune 18, 1992
StatusPublished
Cited by14 cases

This text of 181 A.D.2d 58 (Raes Pharmacy, Inc. v. Perales) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Raes Pharmacy, Inc. v. Perales, 181 A.D.2d 58, 586 N.Y.S.2d 579, 1992 N.Y. App. Div. LEXIS 8145 (N.Y. Ct. App. 1992).

Opinion

OPINION OF THE COURT

Kupferman, J.

Petitioner operates a retail pharmacy at 3817 Broadway and has been enrolled as a provider in New York’s Medicaid program since it commenced operation in 1983. Subsequent to January 5, 1987, the effective date of 18 NYCRR part 504 (Medical Care—Enrollment of Providers), petitioner was notified by letter dated February 16, 1988 that it was required to submit an application for reenrollment as a provider pursuant to 18 NYCRR 504.10. After submission of its application and an on-site inspection of its premises, respondent notified petitioner, by letter dated August 16, 1988, of his determination to discontinue petitioner’s participation in the Medicaid program, effective 60 days from the date of the letter and advised it that it could appeal the denial of its application within that period by requesting reconsideration. Petitioner timely requested such reconsideration and, thereafter, received respondent’s notice of his final decision, affirming his original determination, which was dated January 27, 1989 and stated that it was effective 10 days from its date, specifically February 7, 1989. Such notice was served by certified mail, return receipt requested, upon petitioner’s attorney with a copy mailed to petitioner.

Petitioner then commenced a CPLR article 78 proceeding by order to show cause dated February 7, 1989 pursuant to which respondent was temporarily restrained and enjoined from terminating petitioner’s enrollment as a Medicaid provider. By judgment entered June 14, 1989, the Supreme Court [60]*60granted the petition to the extent of annulling respondent’s determination and reinstating petitioner, finding that petitioner was entitled to a hearing to review respondent’s determination that it had engaged in unacceptable practices. Respondent appealed that judgment but "declined to enforce” his statutory stay pursuant to CPLR 5519 (a) "as a matter of litigation strategy while the appeal was pending.” By order entered February 26, 1991, this court unanimously reversed that judgment, reinstated respondent’s determination and dismissed the proceeding (170 AD2d 378). That decision was published in the New York Law Journal on February 28, 1991.

It is undisputed that petitioner and his attorney were never served either personally or by mail with a copy of this court’s order.

By letter dated March 12, 1991 and addressed to petitioner, respondent notified it that its participation in the Medicaid program had been terminated effective February 27, 1991. On March 18, 1991, petitioner moved in this court for leave to appeal to the Court of Appeals. That day, this court issued an interim stay of termination of petitioner’s participation in the Medicaid program. Thereafter, by letter dated March 30, 1991, respondent notified petitioner that it was reinstated as a Medicaid provider effective March 18, 1991. By order entered May 7, 1991, this court granted petitioner leave to appeal to the Court of Appeals and stayed its termination as a Medicaid provider pending its appeal to that court (173 AD2d 1107). On April 30, 1992, after submission of this appeal, the Court of Appeals affirmed our order of reversal (79 NY2d 988).

After respondent refused to reimburse it for approximately $37,000 in Medicaid services rendered by it from February 28, 1991 to March 13, 1991, petitioner brought the instant article 78 proceeding to compel such reimbursement.

Respondent’s original position was that petitioner was terminated as a Medicaid provider as of February 28, 1991, the date this court’s decision was published in the New York Law Journal. He modified this position in a letter dated April 29, 1991 in which he advised petitioner’s attorney that, since the Law Journal published the decision on February 28, 1991, he had "chosen March 1, 1991, as the new effective date of the denial of re-enrollment. In like fashion, the Department’s records will also reflect a reinstatement pursuant to a stay pending appeal, effective March 18, 1991, the day notice of same was received.”

[61]*61In support of its petition, petitioner stated that it had never been notified of this court’s decision and that it had continued to fill Medicaid prescriptions in reliance upon respondent’s computerized Medicaid Eligibility Verification System which was still operational during the period in question.

In response, respondent reverted to his original position that "the day [this court’s] order was entered, Raes ceased to be a Medicaid provider.” It further argued that, since petitioner’s attorney had represented it throughout the litigation, petitioner was charged with knowledge of this court’s order and, thus, respondent’s failure to serve it does not require respondent to reimburse petitioner. Respondent stated that he does not have the technical means instantaneously to terminate or enroll a provider pursuant to a court order.

Petitioner replied that respondent’s position is contrary to his usual practice of continuing to pay providers whose reenrollment had been denied until the applicable order was served with notice of entry and that this is the first time respondent is seeking to terminate a provider without service of the order of the court.

The IAS court denied the petition, finding that, "[w]hile lulled into a sense of security as to when the pharmacy had to cease operation, it is clear that the stay [sic] was known and counsel representing the pharmacy probably had an obligation to advise that no further prescriptions be filled.” It further found that, while CPLR 2220 had a role here and it was a close question, the State may not be estopped "willy nilly”.

The foregoing, rather lengthy chronology of events is provided for the purpose of demonstrating that throughout these proceedings respondent gave written notice of all of his determinations concerning petitioner’s Medicaid reenrollment application. Essentially, this was not done voluntarily or out of courtesy, but because such notices were required by respondent’s own regulations. Indeed, 18 NYCRR 504.5 (b) provides that if any application is denied, the applicant shall be given a written notice of the denial, which notice will be effective upon the date it is mailed to the applicant. Despite this latter provision, respondent’s notice of his final decision provided that it was effective 10 days from its date.

The point to be derived from all of this is that the mandates of administrative agencies and courts in ordinary circumstances do not have instantaneous effect. In the event the parties or counsel are personally present at the time of a [62]*62ruling or order they are not only on notice of it, but, in many instances, bound by its provisions. Where such is not the case, however, the parties and counsel must be made aware of the action affecting them. We are concerned here with a claim for otherwise apparently valid Medicaid charges incurred during the two-week hiatus between the publication of this court’s order and respondent’s written notice of termination.

Surprisingly, there is no statutory requirement that all court orders must be served in order to be effective. While CPLR 2220 (a) mandates that all orders determining a motion must be entered and filed, subdivision (b) of that rule, which has no counterpart in the predecessor Civil Practice Act, merely provides that when service of an order is made, a mere copy suffices. It does not say when service has to be made (Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C2220:5, at 171).

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Cite This Page — Counsel Stack

Bluebook (online)
181 A.D.2d 58, 586 N.Y.S.2d 579, 1992 N.Y. App. Div. LEXIS 8145, Counsel Stack Legal Research, https://law.counselstack.com/opinion/raes-pharmacy-inc-v-perales-nyappdiv-1992.