Society of New York Hospital v. Axelrod

*471OPINION OF THE COURT

Alexander, J.

We conclude upon this appeal that respondent, Commissioner of Health, improperly considered the ability of petitioners to "afford” labor cost increases above projected levels in determining whether to grant their applications, pursuant to the Supplemental Hospital Index Factor (SHIF) program, for a waiver of the labor cost reimbursement ceiling. Accordingly, his refusal, on the basis of "affordability”, to reimburse petitioners for their actual labor costs pursuant to the SHIF program was arbitrary and capricious.

Pursuant to Public Health Law § 2807 (3),…