Case Information

Matter of Dunkez Private Home Care, Inc. v. McDonald, 2025 NY Slip Op 06107 (App Div, 3d Dept, Nov. 6, 2025)

Introduction

This Article 78 proceeding arose from the New York State Department of Health’s (DOH) revocation of the license of Dunkez Private Home Care, Inc., a licensed home care services agency (LHCSA) in Westchester County. Following multiple surveys in 2019 and 2021, a substantiated patient complaint, and a 30-day suspension order in April 2021, DOH charged the agency with 36 regulatory violations. An Administrative Law Judge (ALJ) sustained all charges and recommended revocation and a monetary penalty, which the Commissioner of Health adopted.

Dunkez sought judicial review, arguing that DOH’s determination lacked substantial evidence and that the penalty was disproportionate. It also relied heavily on its contract with CenterLight Healthcare, Inc., a managed care organization (MCO) that referred 100% of Dunkez’s patients from 2019–2021, asserting that CenterLight’s role excused Dunkez from many regulatory duties. The Appellate Division, Third Department, rejected those arguments and confirmed the Commissioner’s determination.

The opinion clarifies two points of broad significance: first, an LHCSA’s regulatory compliance obligations are nondelegable even when it operates within an MCO network or via contract (10 NYCRR 766.10); second, repeated core-care deficiencies coupled with the agency’s continued operation during a DOH suspension readily justify revocation and monetary sanctions under the “shocking to the sense of fairness” penalty review standard.

Summary of the Opinion

• The court declined to reject petitioner’s brief on technical grounds under CPLR 5528(a)(3); the record sufficed to permit merits review.
• On the merits, DOH’s determination was supported by substantial evidence, including testimony from surveyors and the regional program manager, as well as 86 documentary exhibits.
• Dunkez’s contract with an MCO (CenterLight) did not diminish its statutory and regulatory responsibilities; under 10 NYCRR 766.10, compliance duties remain with the LHCSA.
• The penalty—license revocation and a monetary fine—was not “shocking to one’s sense of fairness,” given the breadth and severity of violations and Dunkez’s operation during a 30-day suspension order.
• The determination was confirmed and the petition dismissed.

Analysis

Precedents and Authorities Cited

• CPLR 7803(4): Judicial review of administrative determinations after an evidentiary hearing is limited to whether the determination is supported by substantial evidence.
• Matter of Wegman v New York State Dept. of Health, 229 AD3d 862 (3d Dept 2024): Reaffirms the substantial evidence framework and deference to agency fact-finding in complex regulatory settings such as health oversight.
• Matter of P.C. v Stony Brook Univ., 43 NY3d 574, 580–81 (2025): Defines substantial evidence as relevant proof that a reasonable mind may accept as adequate and emphasizes reviewing the record as a whole for quality and quantity of proof that permits a reasonable conclusion.
• Matter of Haug v State Univ. of N.Y. at Potsdam, 32 NY3d 1044 (2018): Describes substantial evidence as a “minimal” standard requiring only a reasonable and plausible inference, not the most probable one.
• Penalty review authorities:
  • Matter of Lalima v New York State Dept. of State, 214 AD3d 1051 (3d Dept 2023) and Matter of Barros v John P. Picone, Inc., 188 AD3d 1397 (3d Dept 2020): The “shocking to one’s sense of fairness” test governing administrative penalties.
  • Matter of Bolt v New York City Dept. of Educ., 30 NY3d 1065, 1070 (2018) (Rivera, J., concurring): Characterizes the penalty standard as rigorous.
  • Matter of Sunsea Energy LLC v New York State Pub. Serv. Commission, 229 AD3d 1021 (3d Dept 2024), lv denied 43 NY3d 901 (2025); Matter of Ali v New York City Dept. of Corr., 205 AD3d 1247 (3d Dept 2022); Matter of O’Connor v Cutting, 166 AD3d 1099 (3d Dept 2018): Illustrate deference to agency penalties within the Pell framework.
• Brief adequacy authorities: CPLR 5528(a)(3); Merritt v Wynder, 212 AD3d 607 (2d Dept 2023) (record sufficiency can cure brief defects), contrasted with Matter of Dixon v Rich, 200 AD3d 1378 (3d Dept 2021).
• Statutory and regulatory framework:
  • Public Health Law § 3602(2), (4)–(5): Defines LHCSA services and mandates physician/NP-prescribed care under RN supervision in accordance with a plan of care.
  • Public Health Law § 3605-a(2) and 10 NYCRR 765-2.3: Enforcement mechanisms, including suspension orders.
  • 10 NYCRR Part 766: Detailed operational requirements for LHCSAs (e.g., patient rights, assessments, plans of care, RN supervision, recordkeeping, personnel credentials, immunizations).
  • 10 NYCRR 766.10: Contracting by LHCSAs does not diminish the LHCSA’s responsibility for compliance, quality, and adherence to patient plans of care—central to rejecting Dunkez’s delegation defense.
  • 10 NYCRR 403.3 and 403.5: Requirements for policies and the maintenance of accurate and current registries/database systems.

Legal Reasoning

The court’s analysis proceeded along three major axes: substantial evidence, nondelegable compliance obligations, and proportionality of the penalty.

1) Substantial Evidence Supporting DOH’s Findings

Applying the “minimal” substantial evidence standard, the court credited testimony from a licensed social worker surveyor (who conducted the 2019 and January 2021 surveys), two registered nurse surveyors (including the nurse who substantiated a March 2021 patient complaint), and the DOH regional program manager (who oversaw surveillance activities and was familiar with the 2019 surveyor’s documentation). This testimony was corroborated by 86 documentary exhibits admitted into evidence.

The record reflected pervasive noncompliance across core areas of patient care and agency operations, including:

• Failure to maintain discharge records or notify physicians prior to discharge.
• Absence of clinical assessments, medical orders, plans of care, progress notes, and documentation of RN supervision and aide orientation to care plans.
• Failure to provide patients the bill of rights and complaint procedures.
• Personnel and registry/database deficiencies: outdated entries, missing criminal history checks, and untimely updates (10 NYCRR 403.5).
• Evidence that the agency did not have an accessible or qualified RN during surveys and failed to produce requested and current records.

Critically, the evidence also showed that Dunkez continued to deliver services during a 30-day suspension order, an undisputed and serious violation. Given the breadth of these findings, the court held that the Commissioner’s determination was supported by substantial evidence.

2) Nondelegable Compliance Duties Despite Managed Care Contracts

Dunkez attempted to shift responsibility to CenterLight by contending that its duties were contractually delegated. The court categorically rejected this position, relying on 10 NYCRR 766.10. While LHCSAs may contract with other entities, including MCOs, such contracts “do not diminish the LHCSA’s responsibility to ensure compliance with all pertinent provisions of federal, state and local statutes, rules and regulations, to ensure the quality of all services provided and to ensure adherence by staff to the plan of care established for its patients.”

In other words, where an LHCSA participates in managed care arrangements, it must still maintain RN supervision, obtain and retain medical orders, perform assessments, develop and follow plans of care, provide patient rights information, keep complete and current records, and ensure personnel are properly vetted, trained, and immunized. The LHCSA remains the accountable licensee for DOH purposes, regardless of contractual arrangements or referral patterns.

3) Penalty Not “Shocking” Under the Pell Standard

The Commissioner concluded that the sustained violations—19 of which the ALJ found posed a danger to patients—presented a serious and imminent threat to a vulnerable population. The court emphasized the aggravating factor that Dunkez continued to operate during an active suspension. Measured against the risks to patient safety and the LHCSA’s demonstrated inability to provide compliant care, the sanction of license revocation with a monetary penalty did not “shock the conscience” and thus fell within the agency’s broad discretion.

4) Brief Adequacy

Although respondents sought rejection of the petitioner’s brief for failing to provide a concise statement of facts (CPLR 5528[a][3]), the court declined, holding that the record—containing the verified petition, hearing transcripts, and exhibits—was sufficient to review the merits.

Impact and Significance

For LHCSAs and Managed Care Collaboration

• Nondelegable compliance: LHCSAs cannot rely on MCOs to cure or cover regulatory duties; contracts will not insulate the LHCSA from DOH enforcement when core care and documentation requirements are not met.
• Documentation and RN oversight: Agencies must retain and produce their own records (orders, assessments, care plans, supervision notes, progress reports) and ensure an RN is actively involved and accessible.
• Suspension compliance: Operating during a DOH-imposed suspension is a profound aggravator that can tip the scale toward revocation, even apart from other deficiencies.
• Survey readiness: Unannounced surveys will probe not only patient files and care plans but also personnel files, registry integrity, and policy compliance; lapses across these domains can cumulatively evidence systemic noncompliance.

For Administrative Law and Judicial Review

• Substantial evidence deference: The opinion reiterates that substantial evidence is a “minimal” threshold; plausible, reasonable inferences from the whole record suffice. Documentary corroboration and multi-witness testimony carry significant weight.
• Penalty review rigor: The “shocking to the sense of fairness” standard remains highly deferential; where public safety is implicated and violations are extensive or persistent, severe sanctions are likely to be upheld.
• Record-over-form: Technical briefing defects may be overlooked if the record permits meaningful review, though agencies and litigants should not assume leniency in all cases.

Complex Concepts Simplified

• LHCSA: A Licensed Home Care Services Agency provides home health aide and personal care aide services, often under physician/NP orders and RN supervision, to patients in their homes.
• Plan of care: A clinical roadmap authored by qualified professionals that dictates the services, frequency, and methods for safe, appropriate in-home care.
• Managed care organization (MCO): An entity that arranges and coordinates healthcare for members through a network of contracted providers (e.g., hospitals, physicians, LHCSAs). Contracting with an MCO does not transfer or reduce an LHCSA’s regulatory duties to the DOH.
• Suspension order: An enforcement tool directing an LHCSA to cease operations (often requiring transfer of patients) during a defined period; violating a suspension order is a grave infraction.
• Substantial evidence: A deferential standard of judicial review; asks whether the record contains relevant proof that a reasonable person could accept as adequate to support the agency’s conclusion.
• “Shocking to one’s sense of fairness”: The benchmark for overturning agency penalties; only penalties that are grossly disproportionate to the misconduct will be set aside.
• Article 78 proceeding: A New York procedure to challenge administrative actions for being arbitrary and capricious, an abuse of discretion, or unsupported by substantial evidence.

Conclusion

The Third Department’s decision in Matter of Dunkez Private Home Care, Inc. v. McDonald reinforces two pivotal governance concepts in New York’s home care regulatory regime. First, an LHCSA’s duty to comply with statutes and regulations is nondelegable: managed care contracting and referral arrangements do not dilute the agency’s accountability for patient assessments, plans of care, RN supervision, documentation, and personnel compliance (10 NYCRR 766.10). Second, when an LHCSA exhibits widespread, core-care violations—especially where it continues operating during a DOH-imposed suspension—revocation and monetary penalties are neither disproportionate nor legally vulnerable under the “shocking to the sense of fairness” standard.

The opinion underscores a highly deferential substantial evidence review and a rigorous penalty standard, signaling strong judicial support for DOH enforcement actions that safeguard vulnerable home care populations. For LHCSAs, the decision is a clear compliance directive: maintain complete, timely, and accurate clinical and personnel records; ensure active RN oversight and adherence to plans of care; respect suspension orders; and never assume that contractual relationships with MCOs will mitigate or excuse regulatory noncompliance.