Justice Bernard J. Malone Jr.

Petitioners are three not-for-profit providers of community-based residential services for people with mental illness and two associations that represent the interest of those providers. Respondent Office of Mental Health (OMH) licenses and regulates community-based residential services providers. Respondent Department of Health, as the administrator of the state’s Medicaid program, is involved in Medicaid recoupment efforts. Petitioners began a proceeding challenging the recoupment policy alleging that the policy was not authorized by the Mental Hygiene Law or OMH regulations and that OMH had implemented the policy in violation of the state Administrative Procedures Act. A previous court dismissed the petition in its entirety, finding that Mental Hygiene Law provided sufficient statutory authority for OMH to implement the recoupment policy and that no formal rule or regulation was required. Petitioners appealed and the instant court affirmed, deferring to OMH’s interpretation of the regulations.