DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: New York State Department of Social Services
Docket No. 87-129
Decision No. 891
DATE: August 24, 1987
DECISION
The New York State Department of Social Services (State) appealed
the
decision by the Health Care Financing Administration (HCFA)
disallowing
$46,990 in federal financial participation under Title XIX
(Medicaid) of
the Social Security Act. The disallowance represented the
federal share
of the amount of interest income earned by the State, during
the period
October 1, 1986 through December 31, 1986, on Medicaid funds
withheld
from providers or collected "from providers, from third party
health
insurers, and from windfall activities." HCFA determined that
the
federal government is entitled to share in such interest.
In New York State Department of Social Services, Board Decision No.
588
(1984), the Board determined that such interest constituted
an
applicable credit which should have been used to reduce the
State's
claim for Medicaid expenditures and therefore upheld a
similar
disallowance. In New York State Department of Social Services,
Decision
No. 721, (1986), the Board rejected the State's contention that
a
federal court decision concerning the Food Stamp Program, Perales
v.
U.S., 598 F. Supp. 19 (S.D. N.Y. 1984), aff'd, 751 F.2d 95 (2d
Cir.
1984), required reversal of Decision No. 588.
The State first requested that the disallowance here be reversed solely
on
the procedural ground that HCFA did not formally defer the amount
claimed, as
allegedly required by 45 C.F.R. 201.15, but simply processed
a reduction in
the grant award to the State. The State argued that
HCFA's failure to
issue a formal deferral notice here demonstrates
HCFA's continuing failure to
comply with the deferral regulations. The
State contended that HCFA's
"repeated failure to send deferral notices
necessitates .that this Board take
affirmative action to halt this
illegal [HCFA] practice." Notice of
Appeal, p. 2.
In an Order to Show Cause, the Board noted that the State had not
argued
that it was prejudiced by not having gone through the deferral
process.
Moreover, the Board cited two prior Board decisions involving the
State
(Board Decision Nos. 807 and 815) which indicated that a failure
to
follow the deferral procedures does not necessarily affect the
validity
of a disallowance. The Board stated that it did not appear
that the
deferral process (which provides an opportunity for a state to
submit
documenta- tion supporting a claim) would serve any useful purpose
here,
as the State was not contesting the amount of the interest but
only
challenging HCFA's legal right to a share of the interest.
As to the substantive issue, the State admitted in its notice of
appeal
that this appeal did not present any material issues of fact
which
distinguished it from those issues considered by the Board in
Decision
Nos. 588 and 721. The State accordingly requested that, if the
Board
should not reverse the disallowance on procedural grounds, the
Board
issue a summary decision in this appeal based upon those two
decisions
and their records. State's letter to the Board dated July 21,
1987.
HCFA raised no objection to the issuance of a summary decision.
HCFA's
letter to the Board dated August 12, 1987.
The Board directed the State to show cause why the Board should not
then
issue a summary decision based on the analysis in the Order and in
Board
Decision Nos. 807 and 815 on the procedural issue, and on Board
Decision
Nos. 588 and 721 and their records on the substantive issues.
While repeating its objections to HCFA's actions, the State conceded
that
it is appropriate for the Board to issue a summary decision in
this
appeal. The State presented no reason why the analysis in the
Order was
incorrect. State's letter to the Board dated August 13,
1987.
We therefore sustain the disallowance of $46,990, based on the
analysis
contained in: (1) the Order to Show Cause; .(2) Decision Nos.
807 and
721; and (3) Decision Nos. 588 and 721, all of which we incorporate
by
reference here. 1/
________________________________ Norval D. (John) Settle
________________________________ Alexander G. Teitz
________________________________ Judith A. Ballard Presiding
Board
Member
1. While we sustain the disallowance, we note
that HCFA's statement
as to the procedure it was following here is
confusing. The footnotes
to the attachments to the supplemental grant
award dated May 21, 1987
include paragraph H, which states that $46,990
represents a "claim for
interest due HCFA that is being recovered through the
deferral process."
The definition of "Deferral Action" in 45 C.F.R. 201.15 is
the "process
of suspending payment" of a claim "pending receipt and analysis
of
further informa- tion relating to the allowability of the claim";
there
is no reference to recovering funds claimed to be due HCFA.