Opinion
246-A-2007/A.
Decided July 8, 2011.
Richard R. Schmidt, Esq., representing himself as Administrator.
Michael A. Cardozo, Corporation Counsel of the City of New York, (by: Roy A. Esnard, Special Assistant Corporation Counsel), (Richard H. Dreyfuss, Esq., of Counsel), for Robert Doar as Commissioner of the Department of Social Services of the City of New York.
In this accounting proceeding, the Department of Social Services of the City of New York (DSS) moves by order to show cause seeking leave to file late objections to the administrator's account. The decedent, who was profoundly physically and mentally challenged, died on December 28, 2006 at the age of 26 years, apparently having spent most, if not all, of the last 16 years of his life in a hospital. He is survived by his parents. A Mental Hygiene Law article 81 guardian was appointed for him and a supplemental needs trust (SNT) was established for his benefit. DSS now asserts that even though a large portion of the Medicaid funds paid on behalf of the decedent were repaid, an additional sum is still owed. The administrator opposes the motion on the grounds that DSS has neither provided a reasonable excuse for its delay nor demonstrated the merits of its underlying claim.
On December 18, 2001, the supreme court (Lobis, J.) entered an order in the article 81 proceeding authorizing the guardian to pay Coler Goldwater Memorial Hospital the sum of $351,512.93 and to deposit the balance of the decedent's funds into an SNT. On August 6, 2002, the hospital acknowledged receipt of the sum of $351,512.93 for all services rendered to the decedent through October 12, 2001. After the decedent's death, by a letter dated January 10, 2007, DSS wrote to the article 81 guardian indicating that although the sum of $351,512.93 had been paid, there was a balance due and owing of $1,235,896.59. On or about March 16, 2007, the article 81 guardian paid the requested $1,235,896.59 from the funds held in the SNT, and by a letter dated March 20, 2007, DSS stated that it had received the payment which "will represent full satisfaction of our claim against the Michael Faulkner Supplemental Needs Trust."
On June 21, 2007 a decree was entered granting letters of administration to the administrator. By letter dated July 28, 2008, which was filed with the court, DSS notified the administrator that a balance was due on its Medicaid claim. DSS attached a copy of computer printouts to the letter which purport to detail the medical services provided to the decedent between May 1990 and the date of the decedent's death. The printouts are mostly code numbers unintelligible to the layperson, but the bottom line and the covering letter show a total Medicaid bill of $1,607,066.60 with a balance of $371,167.01 due.
The administrator responded to DSS by letter dated August 4, 2008 denying the claim. Due to the period covered and because of the similarity of the numbers ($351,512 and $371,167), the administrator informed DSS that it failed to credit the estate for the $351,512.93 payment made directly to the hospital by the article 81 guardian, and that it was not entitled to any further payment. When DSS did not reply, by letters dated September 2, 2008 and October 6, 2008 the administrator stated that if he did not hear from DSS shortly, he would file his account seeking to disallow the claim.
DSS failed to respond to the administrator's letters, and the account and citation disallowing DSS' claim were served on DSS, which failed to appear in opposition on the November 26, 2008 return date. By letter dated August 20, 2010, the attorney representing DSS in this application notified the article 81 guardian and the administrator that the $351,512.93 payment made to Coler Goldwater Memorial Hospital "was never received" by DSS, that DSS "mistakenly determined" that credit should be given for that amount and he requested that they contact him "to resolve the Department's outstanding claim in the amount of $351,512.93. . . ." The instant application by DSS seeking leave to file late objections was not made returnable until more than two years after the date that timely objections to the account should have been filed.
DSS asserts that its default was not willful, it seeks relief under CPLR 2004 and 2005, and submits a copy of its proposed objections. Essentially, DSS relies on law office failure, stating that it failed to timely serve and file objections to the account "for the reason that the Citation and account were not ultimately reviewed by an appropriate person." DSS also alleges that: (1) it would have sought permission to file late objections earlier but, due to personnel changes, the papers were misplaced; (2) it contacted the administrator soon after it realized the problem; and, (3) it filed its motion expeditiously after the administrator and article 81 guardian refused to continue discussions.
The administrator responds that before leave to file late objections may be granted, DSS must demonstrate both a reasonable excuse for the delay and that it has a meritorious claim. In support of his contention that the delay was not reasonable, the administrator argues that the discussions he had with DSS prior to, and soon after, the return date of the account, including an alleged conversation with one DSS attorney who stated that the claim would be withdrawn, demonstrate DSS' intentional decision not to file objections. With respect to merit, he asserts that the funds DSS seeks are for the same hospital services the article 81 guardian previously paid and that DSS was paid in full, as evidenced by the March 20, 2007 satisfaction letter and a copy of an acknowledgment from the hospital that it was paid.
CPLR 2004 allows the court to extend the time fixed by "any statute, rule or order upon such terms as may be just and upon good cause shown." CPLR 3012 (d) also specifically provides that the court may extend the time to plead upon a showing of reasonable excuse for the delay or default. Generally, in applications for an extension of time under CPLR 2004, the court may consider many factors, including the length of the delay, the prejudice to other parties by the delay, the reason for the delay, whether the moving party was in default before seeking the extension and if so whether or not there is an affidavit of merit; however, under CPLR 3012 (d) "[i]n the case of pleading defaults . . . the absence of an affidavit of merit defeats the motion regardless of the weight of the other factors considered under CPLR 2004" (Tewari v Tsoutsouras, 75 NY2d 1, 12).
Here, although law office failure might be deemed a valid excuse for the more than two-year period of default by DSS (see CPLR 2005), the papers submitted herein do not remotely come close to establishing a meritorious claim. Specifically, the computer printout furnished by DSS purportedly establishes that it provided Medicaid benefits to the decedent totaling $1,607,066.06 for the period from May 1, 1990 to December 28, 2006. DSS does not deny, and the documents submitted indicate that it cannot deny, that the decedent's article 81 guardian paid Coler Goldwater Memorial Hospital the sum of $351,512.93 for all services provided by the hospital through October 12, 2001. Notwithstanding that DSS asserts that it never received this sum of money, it failed to establish that it excluded from its total billing, the services provided by the hospital prior to October 12, 2001, for which the hospital was paid $351,512.93 by the article 81 guardian. To the contrary, the computer printout submitted contains page after page of services provided by the hospital to the decedent prior to October 12, 2001. In short, DSS has failed to establish that the decedent's estate is not being double billed for services that were paid for during his lifetime. Furthermore, by letter dated August 20, 2010, counsel to DSS indicated that the amount in dispute was only $351,512.93, the sum paid directly to the hospital.
For the reasons herein stated, the court concludes that DSS, even at this late date, has not shown that there is any merit to its claim. DSS failed to demonstrate that it is not now billing for services provided by Coler Goldwater Memorial Hospital which were paid for during the decedent's lifetime. In fact, its submissions herein indicate there was a basis for DSS' previous representation to the article 81 guardian, after the decedent's death, that the claim against the decedent for Medicaid services was satisfied by her payment of $1,235,896.59 to DSS, in addition to the $351,519.93 previously paid directly to the hospital. Accordingly, DSS' application to be relieved of its prolonged default and for leave to file late objections to the account is denied.
Settle order.