MEMORANDUM
On аppeal from the grant of an injunction prohibiting defendants from implementing without prior HEW approval three new State regulations, 10 N.Y.C.R.R. §§ 86.21(k), 86.14(b), and 86.26, which govern aspеcts of State reimbursement to hospital participants in the Medicaid program, the Court of Appeals remanded for a determination of whether оr not HEW’s approval of two of the regulations subsequent to the grant of injunctive relief rendered them retroactively effective.
The State’s principal contentions in support of the proposition that the regulation may be retroactively applied are substantially repetitious of its arguments on the question, earlier decided by the court, as to whether prior approval from HEW was required. We continue to believe that the initial ruling was correct and should not be modified or reversed. Both the language of the statute, 42 U.S.C. § 1396a(a)(13)(D) and of the regulations promulgated by the agency charged with administration of the medicaid program, 45 C.F.R. § 250.30(a)(2) (see Lewis v. Martin,
It is suggested that because New York provides prospective rather than retrospective reimbursement of medicaid costs, prior HEW approvаl was unnecessary and retroactive application of HEW approval is appropriate: “Even if charges were unreasonable or сonfiscatory, prior approval of charges is not needed since the Plan a priori provides for a method of payment of costs.” State Memorandum at 3. However, a hospital’s ability to plan its procedures around reimbursement eligibility criteria (necessary to permit planning of the hospital budget) depends not on whether reimbursement is prospective or retrospective but on its knowledge before expenditures or other commitments are made of whаt the requirements for receiving State reimbursement are.
The State’s argument that the hospitals were put on notice of the proposed changes is simрly incorrect. Although it is true that the State advised the hospitals in the Fall of 1975 that its 1976 payments would be made on the basis of “interim” development of new rates, there was no notice that the State might attempt later in 1976 retroactively to change the rules under which the hospitals were operating in January, 1976. Indeed, when the State submitted the new regulations to HEW in the Spring of 1976, the State itself proposed an effective date of May 28, 1976 for regulations §§ 86.14(b) and 86.21(k) and of June 24, 1976 for regulation § 86.26. Undеr these circumstances it is inconceivable that the hospitals can be charged with knowledge that the new regulations would be applied retroactively to January 1st. See St. Francis Memorial Hospital v. Weinberger,
The State contends that retroactive effect must be given to the now-approved regulations because of 42 U.S.C. § 1396a(a)(30) which rеquires a state plan to “provide . . . methods and procedures relating to . the payment for, care and services available under the plan ... to аssure that payments . are not in excess of reasonable charges consistent with efficiency, economy, and quality of care”. It is argued that since thе changes were approved, payments at the former rates — to the extent that they were any higher — would be “in excess of reasonable chargеs.” However, the previous payment methods had also been approved by HEW and were presumably reasonable until such time as they were replaced. Moreover, as indicated above, it would be inconsistent at least with “efficiency,” and “quality of care” to change the rules for reimbursable expenses after an expenditure period has ended.
Acсordingly, the defendants are directed to comply with the order of August 2, 1976 as modified by the order of October 15th.
It is so ordered.
ENDORSEMENT
The State defendants move to dismiss for lack of subjeсt matter jurisdiction on the grounds that the relief still sought and previously awarded is barred by the Eleventh Amendment. The motion is based on the proposition that the effeсt of the statute passed by Congress October 18, 1976, Pub.L. No. 94-552, repealing 42 U.S.C. § 1396a(g) which formerly required the State to waive its Eleventh Amendment immunity, is retroactive and bars past аnd future money judgments.
In ordinary circumstances, the court would, of course, entertain a motion to dismiss on these grounds at any stage of the proceedings. The сircumstances here, however, are far from ordinary. Prior rulings of this court are presently on appeal before the Court of Appeals, including the Eleventh Amendment argument put to this court. Indeed, on an earlier application to the Court of Appeals for a stay pending appeal from the earlier rulings of this court, the State defendants argued as a ground for the stay the very proposition now put before this court, and the Court of Appeals nevertheless refused a stay.
It is suggested that in spite of the extraordinary posture of the case, the motion should, nevertheless, be entertained by this court pursuant tо a line of cases relating to the provisions of Rule 60(b) of the Federal Rules of Civil Procedure.
The argument runs as follows: The instant motion may be regarded as а motion under Rule 60(b) which authorizes the court to vacate a judgment for mistake, voidness, or “for any other reason justifying relief from the operation of the judgmеnt.” It is next contended that the Court of Appeals of this circuit has ruled in Ryan v. United States Lines Co.,
Although in fact we decline to entertain the motion, for the purpose of clearing the docket the motion is denied.
It is so ordered.
Notes
. The State submitted two of the three proposed changes in a single “transmittal” to HEW. These two proposed regulations, 10 N.Y.C.R.R. §§ 86.21(k) and 86.14(b) were both approved by HEW on August 16, 1976. A third amendment (§ 82.26) was separately submitted by the State to HEW, and was approved by HEW on October 4, 1976. Although at the
. We disagree with plaintiffs’ contention that Weiss v. Hunna,