GAB Decision 593
November 16, 1984
New York State Department of Social Services;
Ballard, Judith; Garrett, Donald Teitz, Alexander
Docket No. 84-136
The New York State Department of Social Services (State) appealed the
disallowance of $14,161,559 in federal financial participation (FFP) by
the Health Care Financing Administration (Agency). The disallowance,
based on the State's original expenditure report dated December 2, 1983,
included local district supplemental claims and state audit adjustments
relating to periods prior to October 1, 1981 totalling $14,160,050 FFP
under Title XIX of the Social Security Act (Medicaid). The second
revised expenditure report, dated December 29, 1983, included an Office
of Mental Retardation claim for day treatment and transportation
services related to the period February to July 1981 amounting to $1,549
FFP. The grounds for disallowance were that the claims were unallowable
because they were not filed within the limitations for timely filing of
claims in certain statutes and regulations.
The State's claim for $637,660 of the total amount disallowed related
to expenditures for periods prior to October 1, 1978. The Agency stated
that this amount was disallowed because the claim was not filed within
one year of the expenditures, as required by Pub. L. 97-92, Pub. L.
97-276, and 45 CFR 95.11.
The Agency disallowed $3,596,506 FFP related to expenditures in
fiscal year (FY) 1979 because the claim was not filed by May 15, 1981,
as required by section 306(b) of Pub. L. 96-272 and 45 CFR 95.10.
The other amounts disallowed totalling $9,927,433 FFP ($9,925,884 and
$1,549) related to expenditures after FY 1979. The Agency disallowed
these claims because they were not filed within two years after the
calendar quarter in which the State made the expenditures, as required
by section 1132 of the Social Security Act and 45 CFR 95.7.
The State asked the Board to treat separately the pre-FY 1979 claims
and the later claims. As to these later claims, totalling $13,523,939
($3,596,506 for FY 1979 and $9,927,433 for later (2) periods), the State
in its notice of appeal stated that there were no material issues of
fact which distinguished these claims from those in Board Docket Nos.
83-170 and 180, where the Board had rejected the State's arguments. New
York State Department of Social Services, Decision No. 521, March 6,
1984. The State requested that the Board "issue a summary decision as
to the $13,523,939 disallowance based upon its holding in Decision No.
521." (Notice of Appeal, July 24, 1984, p. 2) There being no objection
by the Agency, the Board so proceeded with respect to this portion of
the appeal, docketed as 84-133. New York Department of Social Services,
Decision No. 569, August 31, 1984.
This left for disposition the remaining $637,660 in disallowed claims
for expenditures related to periods prior to October 1, 1978 (pre-FY
1979). This amount is the subject of this decision.
In its notice of appeal, the State first requested that these pre-FY
1979 claims be consolidated with Board Docket No. 83-249, since the
State said they involved the same issues present in that case. In
acknowledging the notice of appeal the Board said that there was no
further information in either the disallowance letter or in the notice
of appeal to indicate why the $637,660 involved in this case was similar
to the $98,559 in pre-FY 1979 claims in Docket No. 83-249. The Board
stated it would not consolidate the appeals without additional
information about the details of the claims underlying the $637,660 in
question here.
The State subsequently informed the Board that the claims involved in
this case were entirely different from those in Docket No. 83-249,
although the same legal issue applied. (See letter Reines-Graubard to
Rahmas, August 30, 1984) Briefing then followed.
In its brief (September 4, 1984) the State first argued that the
pre-FY 1979 claims involved here were not subject to a one-year filing
requirement under Pub. L. 97-92, Pub. L. 97-276, and 45 CFR 95.11, the
authorities cited by the Agency for the disallowance. Instead, the
State contended that the claims were subject to the two-year filing
limitation in section 306 of Pub. L. 96-272, and incorporated by
reference its arguments on that point in Docket No. 83-249.
The State admitted that the $637,660 in claims for pre-FY 1979
expenditures were not filed until December 2, 1983. On their face,
these claims would therefore in any event be time-barred by the two-year
limitation of section 306. The State argued, however, that these claims
were exempt from the statutory filing limitations because they involved
"audit exceptions or adjustments to prior year costs," citing section
1132(a) of the Social Security Act. In addition, the State contended
that the claims were timely filed, (3) since the underlying expenditures
were not incurred until they were reclassified as being eligible for
federal funding under Title XIX. Finally, the State's position was that
the relevant statutory and regulatory limitation provisions cannot be
applied retroactively so as to bar payment of claims which, in the view
of the State, relate to expenditures incurred prior to their effective
date.
In its brief the State noted that it had put forward these same
arguments in Board Docket Nos. 83-170 and 180, and the Board "had
rejected these arguments in their entirety," when it issued Decision No.
521. (New York State Department of Social Services, March 6, 1984) The
State requested that the Board find the filing requirements of section
306 applicable to the present case and issue a summary decision as to
the $637,660 disallowance based upon the Board's holding in Decision No.
521.
The Agency filed a brief in which it first argued that the claims
were properly disallowed because they were not filed within the one-year
limitation period in Pub. L. 97-92 and 92-276. In the alternative, the
Agency's position was that if the one-year limitation did not apply,
then the claims were not filed timely under section 306 of Public Law
96-272 and section 1132(a) of the Social Security Act. The Agency
agreed that Decision No. 521 should control if the one-year limitation
was not applicable.
I. The one-year claiming requirements do not bar payment of the claims.
The Board has recently decided that Pub. L. 97-92, Pub. L. 97-276,
and 45 CFR 95.11 do not permanently bar reimbursement of claims for
pre-FY 1979 expenditures which were not filed within one year after the
fiscal year in which the expenditures occurred. Joint Consideration --
Timely Filing of Claims, Decision No. 576, October 5, 1984. Therefore,
payment of the claims here is not permanently barred merely because the
claims were filed more than one year after the expenditures were made.
II.The claims are barred by section 306(b) of Pub. L. 96-272.
The State, in asking the Board to issue a summary decision based upon
Decision No. 521, in effect admitted that there are no material issues
of fact which distinguish this appeal from Board Docket Nos. 83-170 and
83-180. Therefore, based on Decision No. 521, we conclude that the
claims here are barred by statutory filing limitations.
The Board makes two observations in complying with the State's
request for a summary decision. The first is that the claims disallowed
here are not subject to the general two-year filing (4) limitation of
section 306(a) of Pub. L. 96-272, codified as section 1132 of the Social
Security Act. Since the claims were pre-FY 1979, the time limit for
filing was not two years from the end of the quarter in which the
expenditures were made, but May 15, 1981. This limitation is based on
the January 1, 1981 date in section 306(b)(3) of Pub. L. 96-272, as
extended under the authority of section 306(b)(4). See, 46 Fed. Reg.
3528, January 15, 1981. It makes no difference in this case whether the
two-year or the May 15, 1981 filing requirement controls. If the
expenditures were made prior to fiscal year 1979, the claims were
clearly barred by December 1983 when they were filed.
The other observation of the Board is in reference to the State's
repeated description of the time limitations in Pub. L. 96-272 as being
"retroactive" and therefore not enforceable to bar these claims. The
limitations are "retroactive" only in the sense that the State defines
the term, as barring payment of claims which "relate to expenditures
incurred prior to their effective dates." (State brief, p. 2)
It is true that the limitations in section 306 related in part to
claims for expenditures incurred prior to the effective date of the
statute, such as pre-FY 1979 claims. The statute, however, did not on
its effective date (June 17, 1980) bar any claims for past expenditures,
no matter how old, in the same way that the one-year limitations in I
above, as interpreted by the Agency, purported to do. As discussed in
Decision No. 521 (p. 5), the states had from June 17, 1980 to May 15,
1981 to file any claims for expenditures made before October 1, 1979.
Therefore, the statute in that sense was not retroactive.
CONCLUSION
Based on New York State Department of Social Services, Decision No.
521, March 6, 1984 (which we incorporate here), we sustain the
disallowance of $637,660 FFP for claims for expenditures before FY 1979.
MARCH 19, 1985