Ulster Home Care Inc., et al.,
Respondents,
v.
Dennis C. Vacco, as AttorneyGeneral of the State of New York,
Appellant.
2001 NY Int. 57
Effective January 1, 1994, the New York State Department of Social Services (DSS) amended the Medicaid regulation setting reimbursement rates for providers of personal care services. The amended regulation states:
(18 NYCRR 505.14[h][7][ii][a][1] [emphasis added]). The primary issue here is whether the rate the provider charges the general public for personal care services is unconstitutionally vague. We conclude that it is not.(1) Medical assistance payments to personal care services
providers for any rate year beginning on or after January 1, 1994, are made at the lower of the following rates: (i) the rate the provider charges the general public for personal care services; or
(ii) the rate determined by the department in accordance with [a cost-based methodology]
This case arose in 1997 during a Statewide audit and investigation by the Attorney General's Medicaid Fraud Control Unit (MFCU) of home health care agencies providing personal care services to Medicaid recipients. MFCU concluded that plaintiff Ulster Home Care had overcharged Medicaid for personal care services by approximately $600,000. MFCU concluded that instead of billing Medicaid at the DSS-determined rate (subdivision [ii] of the regulation), Ulster should have billed Medicaid at the rate it charged the general public for personal care services (subdivision [i]), which was the lower of the two rates. MFCU also concluded that Ulster had attempted to conceal the overcharges by overstating the amounts it charged its private-pay patients.
The Attorney General sought to bring criminal fraud and
larceny charges before a grand jury. In May 1998, plaintiffs
Supreme Court denied plaintiffs' motion for summary
judgment in its entirety. The Appellate Division reversed,
determining that the regulation was facially invalid because the
terms general public and rate were not defined and no
standards for their application were established (268 2 59,
Before this Court, the Attorney General contends that the Appellate Division erred by permitting a facial challenge rather than requiring plaintiffs to demonstrate that they could not understand the regulation and by granting summary judgment on the limited record before it.
A statute, or a regulation, is unconstitutionally
vague if it fails to provide a person of ordinary intelligence
with a reasonable opportunity to know what is prohibited, and it
is written in a manner that permits or encourages arbitrary or
discriminatory enforcement (People v Foley, , 94 NY2d 668, 681;
People v Nelson, , 69 NY2d 302).
Neither the term general public nor rate as used
in the regulation is so vague that it could not be understood by
a person of ordinary intelligence or could be arbitrarily
enforced. The challenged language has a common understanding and
is used in other State Medicaid and Medicare regulations (see,
e.g., 8 NYCRR 247.15[c][1]; 10 NYCRR 86-1.21[d]; 18 NYCRR
415.69[e][2]; see also, 38 CFR 17.55[h][Federal regulations of
medical use of hospitals by veterans]; 42 CFR 413.9[a] [Federal
regulation of cost reimbursement to providers in the Medicare
program]). The limited application of this regulation to home
Moreover, plaintiffs were not subject to prosecution
because they allegedly violated the public charge regulation.
Rather, the intended charges were grand larceny and offering
false instruments for filing. The alleged violation of the
regulation was only an element of proof of these crimes and
violation of the regulation alone, without a knowing attempt to
deceive or defraud, could not support criminal liability (see,
United States v Larm, 824 F2d 780 [9th Cir] [once a trier of fact
determines that a person understood a regulation when it was
allegedly violated, a subsequent challenge to the regulation for
ambiguity is irrelevant so long as the person is actually
convicted of violating a statute that provides adequate notice of
the conduct proscribed]). On this separate basis, it was error
Accordingly, the judgment appealed from and the order of the Appellate Division brought up for review should be reversed with costs and the case remitted to Supreme Court for further proceedings in accordance with this opinion.