by refusing to implement the Appellate Division decision in
Stratford v. DMAHS in the rate years subsequent to 1980.
Under the doctrine of qualified immunity "government officials
performing discretionary functions generally are shielded from
liability for civil damages insofar as their conduct does not
violate any clearly established statutory or constitutional
rights of which a reasonable person would have known." Harlow v.
Fitzgerald, 457 U.S. 800, 817-18, 102 S.Ct. 2727, 2737-38, 73
L.Ed.2d 396 (1981).
With respect to the rate years 1981 and 1982, (when Plaintiff
failed to preserve its right to appeal as provided by N.J.A.C.
10:63-3.2 et seq.), Plaintiff cannot claim that Defendants
acted unreasonably since a plain reading of the code reveals that
a facility is only entitled to review of its annual rate where it
complies with the administrative appeals process.
Furthermore, as noted above, the Appellate Division ruling did
not explicitly or implicitly provide that Plaintiff was entitled
to a lease pass-through or other hardship relief for any rate
year subsequent to 1980. Thus, a reasonable interpretation of
this opinion would not mandate Russo or Hager to adjust any rates
except the 1978, 1979 and 1980 years.
Therefore, when Defendants refused to implement the Appellate
Division ruling with respect to the rate years 1981 and 1982,
they did not violate any clearly established statutory or
constitutional rights since (1) Plaintiff failed to preserve its
rights; and (2) the Appellate Division decision did not create a
constitutional right to have the lease pass-through right applied
For the rate year 1984, Plaintiff filed a timely Level II
appeal. Shortly after receiving Plaintiff's request for a Level
II appeal, HFRS Director Charles Buttacci wrote Plaintiff a
letter in which he stated that a proviso like the one included in
the 1983 Level I decision (i.e., stating that the rate for that
year would be adjusted if Plaintiff prevailed in the 1978-80
appeal) "should have been incorporated in [the] Level I decision
with respect to the . . . 1984 rates." Defendants' Brief, App.,
Vol. II, Exh. 23.
Plaintiff voluntarily withdrew its Level II appeal, with the
knowledge that withdrawal at that point would prejudice its right
to further administrative appeal. Again, in light of Plaintiff's
failure to comply with the administrative appeals process, Russo
and Hager's actions were objectively reasonable.
In sum, with respect to the closed rate years (1981, 1982 and
1984) Defendants acted reasonably by refusing to grant
retroactive reimbursement for those years. see Golden Five, Inc.
v. Nebraska Department of Social Services, 229 Neb. 148,
425 N.W.2d 865 (1988) (Medicaid provider which failed to file an
administrative appeal was precluded from obtaining retroactive
adjustment for that rate year); Matter of Emmanuel Nursing
Home, 411 N.W.2d 511, 516 (Minn.App. 1987) (holding that a
nursing home whose rates were calculated under a "rule not
properly promulgated under the Administrative Procedure Act" was
not entitled to have rated recalculated where it failed to file a
timely appeal of the rate decision).
For the rate year 1985, Plaintiff was assured by the DMAHS that
there was no need to file a Level II appeal since, if Plaintiff
prevailed on appeal of the earlier rate years (1978-80) those
findings would be applied to the rate year for 1985. It is
undisputed that, for the first half of 1985, Plaintiff was
granted a lease pass-through rate. For the second half of the
1985 rate year, however, the pass-through was not granted since,
in January of 1986, the lease pass-through was allegedly
repealed. To the extent that Plaintiff disputed the issue of
whether or not the provision was in fact repealed, it should have
appealed the DMAHS's finding by filing a Level II administrative
appeal. Presumably, Plaintiff's initial failure to file a Level
II appeal in reliance upon the DMAHS's assurances that no appeal
was necessary, did not prejudice
its rights to appeal the recalculation of the rate for the year
III. Attorney's Fees, 42 U.S.C. § 1988
If Plaintiff thought it was entitled to attorneys fees for the
proceedings in state court, it should have petitioned that court
for such an award. Plaintiff cannot, at this time, seek to
recover fees for the proceedings conducted before the Appellate
Court. see Blow v. Lascaris, 668 F.2d 670 (2d Cir. 1982) cert.
denied 459 U.S. 914, 103 S.Ct. 225, 74 L.Ed.2d 179 (No valid
cause of action exists for award of attorneys fees to prevailing
parties in proceedings relating to the vindication of civil
rights in the context of a state administrative proceeding where
recourse to federal court on the merits of the claim is not
necessary or available.) Clearly, since Plaintiff was not forced
to appeal the findings of the Appellate Division, they have no
basis to recover attorneys fees.
Moreover, as the Appellate Division noted itself, the prior
adjudication was not dispositive on the issue of § 1983; "[W]e do
not decide appellant's alternative argument that DMAHS's unlawful
adoption of its so-called policy and subsequent denial of relief
to appellant violated appellant's Federal Civil Rights,
42 U.S.C. § 1396(a) and § 1983." 215 N.J.Super. at 484, 522 A.2d 442. Since
their was no adjudication on the merits of Plaintiff's § 1983
claim, there can be no recovery for attorneys fees. See Kentucky
v. Graham, 473 U.S. 159, 171, 105 S.Ct. 3099, 3108, 87 L.Ed.2d
Finally, Plaintiff is not entitled to attorneys fees in
connection with the present proceedings because it has failed to
establish a cause of action under 42 U.S.C. § 1983 for any rate
year subsequent to 1980.
IV. Equal Protection
Plaintiff alleges that DMAHS has violated and continues to
violate its right to equal protection under the law by granting
hardship relief to other nursing homes while refusing to grant
the same relief to the Plaintiff.
It is well established that, where a plaintiff raises an equal
protection claim based upon a state official's allegedly
discriminatory enforcement of a facially neutral law or
regulation, plaintiff must prove "intentional or purposeful
discrimination" on the official's part. E & T Realty v.
Strickland, 830 F.2d 1107, 1113-14 (11th Cir. 1987). Courts have
held that, "Even arbitrary administration of a statute, without
purposeful discrimination, does not violate the equal protection
clause." Shango v. Jurich, 681 F.2d 1091, 1104 (7th Cir. 1982).
Therefore, Plaintiff must establish that the DMAHS
intentionally discriminated against it by refusing to grant
Plaintiff a lease pass-through rate or other hardship relief.
Plaintiff has not proffered any persuasive evidence which would
justify an inference that DMAHS deliberately discriminated
against the Plaintiff when it declined to grant Plaintiff
Defendants, however, have provided a rational basis to justify
their actions. For the years 1978 through 1980, Defendants
maintain that the DMAHS was simply following department policy,
which at that point was not deemed unlawful. Even if Russo acted
unreasonably, however, (which, as I concluded above, he did not)
Plaintiff has not established that he intended to discriminate
against the Plaintiff.
With respect to the "closed" rate years (1981, 1982 and 1984)
there was no purposeful discrimination since Plaintiff failed to
preserve its right to administrative review of the DMAHS's rate.
In the years following 1986, Plaintiff has also failed to
establish that DMAHS intentionally discriminated against it by
refusing to grant it hardship relief. Plaintiff has not
effectively countered Defendants' assertions that; (1) the lease
pass-through provision is no longer in effect since it was
repealed in 1986; and (2) Plaintiff is dissimilar
to the facilities which it alleges are currently receiving
hardship relief and, therefore is not entitled to such relief.
In the absence of intentional or purposeful discrimination,
Plaintiff cannot support a cause of action under the equal
protection clause. Moreover, Defendants' rational explanation
serves to justify its actions. Thus, see Port Chester Home v.
Axelrod, 732 F. Supp. 440, 446 (S.D.N.Y.) (rejecting nursing
home's claim that New York Medicaid agency violated its equal
protection rights by failing to reimburse it for its actual lease
costs: "To defeat plaintiff's equal protection claim defendants
must do no more than articulate a rational reason for the
distinction about which plaintiff complains.")
Defendants' motion for summary judgment is granted; Plaintiff's
Amended Complaint is dismissed. Plaintiff's cross-motion for
summary judgment is denied.