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8 N.J.A.R. 195

Pine Crest Nursing & Convalescent Home v. Medical Assistance & Health Services, Division of
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Citation: 8 N.J.A.R. 195
Decision Date: 1982
Synopsis: Petitioner, having agreed to repay over $70,000 in overpayments from the Division of Medical Assistance and Health Services, con- tested the Division's right to assess interest penalties under the Medi- cal Assistance and Health Services Act, N.J.S.A. 30:4D-17(f). The administrative law judge assigned to the case found that the overpayments were based upon 1974 and 1975 cost studies for which the field work was finished in February 1976. The first reported audit findings were received by the petitioner in January 1977; after a dispute as to'the amount of principal in May 1977, the Division corrected its figLres. These revised figures were not communicated to petitioner, however, until July 1980. The Division had notified peti- tioner in 1977 that an interest assessment would be imposed and subsequently sought to collect that interest dating back to January 1977. The judge concluded that since the amount of principal had been in dispute until 1981 and had, in fact, been revised three times until that date, the true notice of recovery was dated March 18, 1981 and it was from that date that interest should be calculated. Upon review, the Director of the Division of Medical Assistance and Health Services rejected this decision. The Director found that N.J.S.A. 30:4D-17(f) provides a general rule that interest on an un- intentional overpayment shall accrue from the date the overpayment was made and shall continue until the same is repaid. The interest penalty for overpayments was found to be automatically triggered by the provider's receipt of the overpayment and was not dependent upon either completion of an audit or notification of overpayment to the provider. To hold otherwise, the Director observed, would neutralize the statute's deterrent effect which is to deter careless billing on the part of providers. The Director noted that the legislative history of the statute estab- lishes a twofold purpose: the creation of an incentive for the State to act quickly on recovering overpayments and secondly, the grant of relief to providers from unduly long delays on the part of the State in giving providers notice of an overpayment. These dual objectives are accomplished by tolling any interest penalty in the event the State does not give the provider preliminary notice of overpayment within 180 days of the field audit. This tolling period would end on the date that preliminary notice is given to the provider. Accordingly, the petitioner was found to be liable for the payment of interest from the date of overpayment through the 180th day after the completion of the field audit. The period for the payment of interest was then tolled until petitioner received the preliminary notice of overpayment from which date interest began to run again. Murray J. Klein, Esq., for petitioner (Gelade and Klein, attorneys) !van J. Punchatz, Deputy Attorney General, for respondent (Irwin I. Kimmelman, Attorney General of New Jersey, attorney) Initial Decision
Citation Tracker rejected, Div. of Med. Ass't.; affirmed -App. Div., A-5091-81, 6/2/83 (unreported) [Updated through 1991]