NYC Hospital Must Repay $4.9M for Boy's 6-Year Inpatient Stay

A state appellate court cited the terms of a medical malpractice settlement the hospital had signed with the boy's parents.

NewYork-Presbyterian Hospital must return nearly $4.9 million in Medicaid funding it received for one child's inpatient stay that spanned six years and four months at the facility, a state appellate court ruled Thursday.

The five-judge panel's decision was based on the terms of a medical malpractice settlement agreement the hospital reached in 2008 with the boy's parents.

In the agreement, NewYork-Presbyterian had stipulated it "will assume full responsibility for any monies … ultimately found to be due to Medicaid" in connection with the child's lengthy hospitalization. That means it must return nearly $4.9 million to the New York City Department of Social Services (DSS), which is the relevant Medicaid administrator, the appellate judges determined.

The decision overruled a lower court's 2016 decision to the contrary.

What made this case so tricky was the fact that two different agencies are tasked with issuing payments and collecting recoupments under Medicaid: After the New York State Department of Health (DOH) issued payment, the DSS called for the funds to be recouped.

Thursday's decision determined DSS was "an intended third-party beneficiary" of the hospital's settlement agreement.

Here's an overview of key events pertinent to this case, as recounted in court records:

• November 8, 2003: An 18-month-old boy was hospitalized at NewYork-Presbyterian Hospital with a congenital condition. Later that month, the boy suffered injuries that allegedly resulted from negligence.
   
• 2004: A medical malpractice lawsuit was filed while the boy remained hospitalized.
   
• 2008: The hospital signed a settlement agreement that included $6 million for the child's post-discharge care, among other provisions.
   
• March 20, 2010: The child died in the hospital without ever having been discharged.
   
• November 2010: The hospital billed DOH for the costs incurred in caring for the child.
   
• 2012: "After substantial downward adjustment of the invoiced sums," DOH paid nearly $4.9 million to the hospital. The payment then drew scrutiny from DSS.
   
• 2014 & 2015: DSS claims against trustees of the deceased child's estate were dismissed.
   
• September 2016: The final DSS claim, against the hospital, was dismissed. That decision was overturned by Thursday's appellate ruling.

A spokesperson for NewYork-Presbyterian Hospital did not respond to requests for comment from HealthLeaders Media.