Appeal from a judgment of the United States District Court for the Southern District of New York (Robert Sweet, Judge) dismissing a complaint brought under 42 U.S.C. § 1983 alleging that a Medicaid reimbursement rate was reduced without according due process to a Medicaid provider. Affirmed.
Before: FEINBERG, Chief Judge, WINTER, Circuit Judge, and LASKER, District Judge.*fn*
Bella Oberlander and Sandor Oberlander, doing business as Flatbush Manor Care Center ("Flatbush Manor"), appeal from a judgment dismissing their complaint.*fn1 The complaint alleged that in reducing the daily per patient reimbursement rate for Flatbush Manor's provision of services to Medicaid patients, the defendants, state officials administering the New York Medicaid program, violated federal law and deprived Flatbush Manor of property without due process, all in violation of 42 U.S.C. § 1983 (1976). The complaint also asserted pendent state claims. The district court dismissed the complaint on the grounds that the conduct alleged did not violate federal statutory law and that the state procedures utilized were consistent with due process guarantees.
FACTS AND PROCEEDINGS BELOW
Flatbush Manor is a skilled nursing facility licensed under New York law to provide residential health care. It has participated in the Medicaid program since 1981 as a provider reimbursed by state and federal funds for the cost of services rendered to eligible patients. See 42 U.S.C. §§ 1396 et seq. (1976). Over 95% of Flatbush Manor's operating revenues are derived from Medicaid reimbursement. Reimbursement rates are based on the average cost of services within a particular geographic area or on a particular facility's budgeted cost, whichever is lower. N.Y. Admin. Code tit. 10, § 86-2.15(b)(1)(2) (1982).
On November 2, 1982, the Bureau of Residential Health Care Facility Reimbursement ("Bureau"), an agency of the New York State Department of Health, informed Flatbush Manor by letter that, "based on 1981 costs," its reimbursement rate for calendar year 1983 had been fixed at $99.84 per patient per day. The letter informed Flatbush Manor that, if it objected to the rate calculation, it could pursue an administrative appeal through written submissions as to issues of fact and law.
On March 14, 1983, the Bureau informed Flatbush Manor that its daily reimbursement rate for calendar year 1983 had been reduced to $92.83 as a result of "technical corrections." The March 14 letter also informed Flatbush Manor of its right to an administrative appeal in the event it objected to the rate.
Shortly after receipt of the March 14 letter, Flatbush Manor informed the Bureau that it believed the original rate to have been correctly computed and that it objected to the revised rate. In response, the Bureau again referred Flatbush Manor to its right to an administrative appeal mentioned in the previous two letters. It also indicated that the Bureau intended to recoup any excess payments already made in 1983 by imposing a set-off against future reimbursements. The amount of the excess to be recouped by set-off was about $100,000.
Flatbush Manor brought this action for a declaratory judgment that the original rate had been correctly calculated and was revised in violation of the federal Medicaid laws and Flatbush Manor's right to due process. Flatbush Manor also sought an injunction preventing the Bureau from implementing the revised rate and from recouping prior overpayments "until plaintiffs have availed themselves of the remedies afforded them by law."
Judge Sweet denied Flatbush Manor's request for a preliminary injunction against implementation of the revised rate and recoupment of overpayments. He held that, under New York law, Flatbush Manor enjoyed no property interest in future Medicaid reimbursement payments, but he implicitly found a protected property interest in the recoupment of excess payments. Nevertheless, he held that Flatbush Manor was not entitled to a pre-recoupment hearing because a variety of procedural safeguards available under New York law ensured Flatbush Manor both notice of the revision and an opportunity to respond before the set-off was assessed.
Judge Sweet later dismissed the case on the grounds that he lacked jurisdiction to decide whether the Bureau had violated relevant state regulations and that the due process claim lacked merit.
To prevail on its statutory and constitutional claims under 42 U.S.C. § 1983, Flatbush Manor must establish that: (i) "the conduct complained of was committed by a person acting under color of state law"; and (ii) that conduct deprived it "of rights, privileges or immunities secured by the Constitution or laws of the United States." Parratt v. Taylor, 451 U.S. 527, 535, 68 L. Ed. 2d 420, 101 S. Ct. 1908 (1981). Because the revision in Flatbush Manor's reimbursement rate and the resulting set-off were indisputably effected by persons ...