In the Matter of County of Cayuga, Appellant,v.Nirav R. Shah,, et al., Respondents.BriefN.Y.September 7, 2016To be argued by: Christopher E. Buckey, Esq. 10 minutes requested New York Supreme Court APPELLATE DIVISION - FOURTH DEPARTMENT Docket No. CA 14-01886 IN THE MATIER OF THE APPLICATION OF COUNTY OF CAYUGA, Petitioner/Plaintiff Respondent, -against- NIRA VR. SHAH, AS COMMISSIONER OF THE NEWYORKSTATEDEPARTMENTOFHEALTHAND THE NEW YORK STATE DEPARTMENT OF HEALTH, Respondents/Defendants-Appellants. BRIEF FOR RESPONDENT COUNTY OF CAYUGA WHITEMAN OSTERMAN & HANNA LLP Christopher E. Buckey, Esq., Of Counsel Robert S. Rosborough IV, Esq., Of Counsel One Commerce Plaza NANCY ROSE STORMER, P.C. Nancy Rose Stormer, Esq., Of Counsel Michael Bagge, Esq., Of Counsel 13 25 Belle Avenue Albany, New York 12260 Utica, New York 13501 (518) 487-7600 (315) 797-0110 Attorneys for Petitioner/Plaintiff Respondent County of Cayuga Cayuga County Index No. 2014-00000261 TABLE OF CONTENTS TABLE OF AUTHORITIES ...................................................................................................... iii COUNTERSTATEMENT OF QUESTIONS PRESENTED .................................................... 1 PRELIMINARY STATEMENT ................................................................................................. 1 COUNTERSTATEMENT OF FACTS ....................................................................................... 4 The Medicaid Cap Statute ............................................................................................ , ............... 6 Related Prior Litigation .......................................................... , .................................................... 6 Section 61 of the 2012 Executive Budget Law ............................................................................ 9 Recent Overburden Claims Submitted ..................................................................................... 10 The Supreme Court Judgmeut .................................................................................................. 10 ARGUMENT ............................................................................................................................... 11 POINT I - PETITIONER HAS CAPACITY TO CHALLENGE SECTION 61 .................. 11 A. Respondents Challenge Petitioner's Capacity to Bring this Proceeding ................... 12 B. Respondents Waived the Capacity Defense .................................................................. 16 C. Petitioner has Capacity to Challenge Section 61 as a Matter of Law ........................ 17 POINT II- SECTION 61 IS ONLY CONSTITUTIONAL IF CONSTRUED AS A LIMITATIONS PERIOD FOR THE RECOVERY OF OVERBURDEN REIMBURSEMENT ............................................................................................. 18 A. This Court Should Adopt the Third Department's Iitterpretation of Section 61 ..... 18 B. Respondents' Interpretation of Section 61 Violates General Construction Law § 93 ................................................................................................................................... 24 POINT ill - SECTION 61 IS UNCONSTITUTIONAL BECAUSE IT RETROACTIVELY DEPRIVES PETITIONER OF ITS VESTED RIGHT TO REIMBURSEMENT ........................................................................ 25 A. Section 61 Unconstitutionally Deprives Petitioner of its Vested Property Right to Reimbursement ......................................................................................................... 26 i B. Petitioner's Vested Rights to Overburden Reimbursement Are Not Subject to Retroactive Impairment ................................................................................................. 29 1. Section 61 is Manifestly Unfair ........................................................................... 30 2. Petitioner Properly Relied on Its Clear Entitlement to Overburden Reimbursement Under Social Services Law§ 368-a ....................................... 33 3. The Extent of Section 61 's Retroactivity is Excessive ....................................... 35 4. The Public Interest Requires Reimbursement of the Improperly Retained Overburden Payments to Petitioner .................................................................. 38 CONCLUSION ........................................................................................................................... 39 ii TABLE OF AUTHORITIES State Cases Alliance of Am. Insurers v Chu, 77 NY2d 573 (1991) .................................................................. 26 Alweis v Evans, 69 NY2d 199 (1987) ........................................................................................... 20 Andrews, Pusateri, Brandt, Shoemaker & Roberson, P. C. v Niagara County Sewer Dist. No. 1, 71AD3d1374 (4th Dept 2010) ...................................................................................... 16 Boltja v Southside Hosp., 186 AD2d 774 (2d Dept 1992) ............................................................ 37 Brothers v Florence, 95 NY2d 290 (2000) ................................................................................... 23 Caprio v New York State Department of Taxation and Finance, 117 AD3d 168 (1st Dept 2014) ................................................................................................................... 29, 38 Cimo v State of New York, 306 NY 143 (1953) ............................................................................ 19 City of New Yorkv Lawton, 128 AD2d 202 (3d Dept 1987) .................................................. 14, 15 City of New Yorkv State of New York, 86NY2d 286 (1995) ................................................ passim County of Rensselaer v Regan, 173 AD2d 37 (3d Dept 1991), affd 80 NY2d 988 (1992) .... 13, 17 Dorfman v Leidner, 76 NY2d 956 (1990) .................................................................................... 36 Franza v Olin, 73 AD3d 44 (4th Dept 2010) ................................................................................ 26 Gilbert v Ackerman, 159 NY 118 (1899) ................................................................................ 23, 32 Gulotta v State, 228 AD2d 555 (2d Dept 1996) ..................................................................... 14, 15 H Kauffman & Sons Saddlery Co. v Miller, 298 NY 38 (1948) ................................................... 22 Herzog v Board of Educ. of Lawrence Union Free School Dist., 171 Misc 2d 22 (Sup Ct, Nassau County 1996) .................................................................................................. 14 James Sq. Assoc. LP v Mullen, 91AD3d164 (4th Dept 2011), qffd2l NY3d 233 (2013) ... 26, 28 Jeter v Ellenville Cent. School Dist., 41NY2d283 (1977) ........................................ 13, 14, 15, 16 Loretto v Teleprompter Manhattan CATV Corp., 58 NY2d 143 (1983) ...................................... 22 iii Matter of Albany Law School v New York State Off of Mental Retardation & Dev. Disabilities, 19 NY3d 106 (2012) ............................................................................................. 18 Matter of Chrysler Props. v Morris, 23 NY2d 515 (1969) ........................................................... 26 Matter of Consolidated Edison Co. of N. Y. v Department of Envtl. Conservation, 71 NY2d 186 (1988) ................................................................................................................. 19 Matter of County of Cayuga v McHugh, 4 NY2d 609 (1958) ...................................................... 14 Matter a/County ofChemungvShah, _AD3d__, 2015 NY Slip Op 00267 (3d Dept Jan. 8, 2015) ................................................................................. passim Matter of County of Erie v Daines, 83 AD3d 1506 (4th Dept 2011 ) .............................................. 8 Matter of County of Erie v Daines, 96 AD3d 1432 (4th Dept 2012) .............................................. 8 Matter of County of Herkimer v Daines, 60 AD3d 1456 (4th Dept 2009), lv denied 13 NY3d 707 (2009) .......................................................................................................... passim Matter of County of Herkimer v Daines, 83 AD3d 1510 (4th Dept 2011) ..................................... 8 Matter of County a/Nassau v State of New York, 100 AD3d 1052 (3d Dept 2012), lv dismissed 20 NY3d 1092 (2013 ) ........................................................................................... 14 Matter of County of Niagara v Daines, Sup Ct, Niagara County, Kloch, Sr., J., Feb. 18, 2010, Index No. 13 7680 ................................................................................................ 9 Matter of County of Niagara v Daines, 60 AD3d 1460 (4th Dept 2009) ....................................... 9 Matter of County of Niagara v Daines, 79 AD3d 1702 (4th Dept 2010), lv denied 82 AD3d 1719 (4th Dept 2011), lv denied 17 NY3d 703 (2011) ........................................... 7, 9 Matter a/County a/Niagara v Daines, 91AD3d1288 (4th Dept 2012), lv denied 94 AD3d 1481 (4th Dept 2012) ......................................................................................... passim Matter of County of Niagara v Shah, 122 AD3d 1239 (4th Dept Nov. 14, 2014) .................... 1, 21 Matter of County of St. Lawrence v Daines, 81AD3d212 (3d Dept 2011), Iv denied 17 NY3d 703 (2011) .......................................................................................................... passim Matter of County of St. Lawrence v Shah, 124 AD3d 88, (3d Dept 2014) ............................ passim Matter of County of St. Lawrence v Shah, 95 AD3d 1548 (3d Dept 2012) ........................... passim Matter a/Crespo, 123 Misc 2d 862 (Sup Ct, New York County 1984) ....................................... 15 iv Matter of Graziano v County of Albany, 3 NY3d 475 (2004) ...................................................... 13 Matter ofHodes v Axelrod, 70 NY2d 364 (1987) ........................................................................ 26 Matter of Island Waste Servs., Ltd. v Tax Appeals Trib. of State ofN.Y., 77 AD3d 1080 (3d Dept 2010), lv denied 16 NY3d 712 (2011) ....................................................................... 37 Matter of Krauskopf v Perales, 139 AD2d 147 (3d Dept 1988) ............................................... 3, 18 Matter of Monroe County Pub. School Dists. v Zyra, 51AD3d125 (4th Dept 2008), lv denied 52 AD3d 1293 (4th Dept 2008) ................................................................................. 21 Matter of Paver & Wildfoerster (Catholic High School Assn.), 38 NY2d 669 (1976) ................. 21 Matter of Roosevelt Raceway v Monaghan, 9 NY2d 293 (1961) ................................................. 37 Matter of Thomas v Bethlehem Steel Corp., 63 NY2d 150 (1984) ............................................... 36 Matter of Tiffany, 179 NY 455 (1904) .......................................................................................... 19 Matter of Town of Moreau v County of Saratoga, 142 AD2d 864 (3d Dept 1988) ...................... 13 New York Blue Line Council v Adirondack Park Agency, 86 AD3d 756 (3d Dept 2011), appeal dismissed 17 NY3d 947 (2011), lv denied 18 NY3d 806 (2012) .................................. 13 O'Neil v State of New York, 223 NY 40 (1918) ............................................................................ 34 People v ME., 121AD3d157 (4th Dept 2014) ............................................................................ 28 Pines v State of New York, 115 AD3d 80 (2d Dept 2014), appeal dismissed23 NY3d 982 (2014) ........................................................................................................................................ 19 Purcell v Regan, 126 AD2d 849 (3d Dept 1987), Iv denied 69 NY2d 613 (1987) ....................... 15 RingvJones, 13AD3d1078 (4thDept2004) ............................ · .................................................. 17 Rivera v Laporte, 120 Misc 2d 733 (Sup Ct, New York County 1983) ....................................... 15 Roman Catholic Diocese of Albany, N. Y. v New York State Workers' Compensation Ed., 96 AD3d 1288 (3d Dept 2012) ................................................................................................. 23 Stiver v Good & Fair Carting & Moving, Inc., 32 AD3d 1209 (4th Dept 2006), qffd 9 NY3d 253 (2007) ........... : ....................................................................................................... 17 Town of Delhi v Tehan, 119 AD3d 1049 (3d Dept 2014) ............................................................ 16 v Village of Herkimer v Axelrod, 58 NY2d 1069 (1983) ................................................................. 14 Federal Cases Rhem v Malcolm, 507 F2d 333 (2d Cir 1974) .............................................................................. 34 Township of River Vale v Town of Orangetown, 403 F2d 684 (2d Cir 1968) .............................. 15 Statutes, Constitutional Provisions & Regulations 18 NYCRR § 601.3 ......................................................................................................................... 7 CPLR32ll(a)(3), (e) .................................................................................................................... 16 General Construction Law § 93 .................................................................................................... 24 L 2005, ch 58, part C, § 1 ............................................................................................................... 6 L 2005, ch 58, part C, § l(b)-(d) ...................................................................................................... 6 L 2005, ch 58, part C, § l(c) ......................................................................................................... 36 L 2010, ch 109, part B, § 24 ................................. : ......................................................................... 7 L 2010, ch 109, part B, § 40(c) ..................................................................................................... 27 L 2012, ch 56, part D, § 65(k) ................................................................................................. 21, 27 Social Services Law § 368-a .................................................................................................. passim Social Services Law§ 368-a(l)(h) ............................................................................................... 28 Social Services Law§ 368-a(l)(h)(i) ......................................... : ............................................ 19, 33 Other Authorities Merriam-Webster's Collegiate Dictionary, at 228 (1 lth ed 2004) ............................................... 35 vi COUNTERSTATEMENT OF QUESTION PRESENTED 1. Did Supreme Court, Cayuga County (Leone, J.), properly declare Section 61 of Part D of Chapter 56 of the Laws of2012 ("Section 61") unconstitutional? Supreme Court properly held that Section 61 retroactively impaired Petitioner's vested right to reimbursement for the overburden expenses that it incurred on Respondents' behalf prior to January 1, 2006 pursuant to Social Services Law§ 368-a and was therefore unconstitutional. PRELIMINARY STATEMENT Petitioner County of Cayuga ("Petitioner") respectfully submits this brief in opposition to the appeal of Respondents Nirav R. Shah, as Commissioner of the New York State Department of Health, and the New York State Department of Health (collectively, "Respondents") from the Decision and Order of Supreme Court, Cayuga County (Leone, J.), dated May 22, 2014 and entered June 13, 2014, declaring Section 61 of the 2012 Executive Budget unconstitutional, annulling the determination of Respondents to deny Petitioner's claims for overburden reimbursement, and directing Respondents to pay Petitioner's claims in the total amount of $426,630.15. The reimbursement sought in this proceeding is for Medicaid local share payments made by Petitioner commonly !mown as "overburden" under Social Services Law § 368-a. The Third Department recently decided issues identical to the ones presented in this appeal in Matter of County of St. Lawrence v Shah (124 AD3d 88 [3d Dept 2014] ["St. Lawrence III"]), lv denied _AD3d _ [3d Dept Jan. 23, 2015], lv pending undecided) and Matter of County of Chemung v Shah L AD3d _, 2015 NY Slip Op 00267 [3d Dept Jan. 8, 2015] ["Chemung"]). This Court also recently decided Matter of County of Niagara v Shah (122 AD3d 1239 [4th Dept Nov. 14, 2014)), remitting the matter to Supreme Court, Niagara County for further proceedings. Similar proceedings relating to the counties' entitlement to overburden reimbursement are also presently before this Court in Matter of County of Jefferson v Shah (Appeal No. CA 14-00926), Matter of County of Chautauqua v Shah (Appeal No. CA 14-00923), Matter of County of Genesee v Shah (Appeal No. CA 14-01041), Matter of County of Oneida v Shah (Appeal No. CA 14-01405), and Matter of County of Monroe v Shah (Appeal No. CA 14-01888), and before the Third Department in Matter of County of Broome v Shah (Appeal No. 519909). This Court should follow the Third Department's decisions in St. Lawrence III and Chemung. In St. Lawrence III, the Third Department reaffirmed that Petitioner acqnired vested rights to reimbursement under Social Services Law§ 368-a when it paid the State for overburden expenses prior to 2006 for which no local share was owed, but held that Section 61 could be construed to avoid the retroactive impairment of these constitutionally vested rights by interpreting it as setting a final limitations period for the recovery of overburden reimbursement claims. Section 61, the Third Department held, extioguished the counties' remedy, not their substantive right to reimbursement. Notably, Respondents essentially concede that Section 61 was intended to provide a statute of limitations for reimbursement claims. The Third Department held, however, that the limitations period forwarded by Respondents did not comport with procedural due process. Due process requires that a limitations period imposed on the exercise of a vested right run for a reasonable period after the effective date of the statute. Thus, in declaring Section 61 constitutional, the Third Department read it together with the purpose of Social Services Law § 368-.a to provide the counties with 100 percent overburden reimbursement, determined that the two provisions could be harmonized using settled principles of statutory interpretation, and exercised its discretion to impose a six- month grace period that applies to all counties throughout the state, including Petitioner here, running from November 26, 2014. In Chemung, the Third Department confirmed its decision in St. Lawrence III, once again holding that the 2012 amendment was not unconstitutional, but expressly acknowledging that the 2 six-month grace period adopted by the Court in St. Lawrence III applied to Chemung County and authorized Chemung County to file a claim for reimbursement of any pre-2006 overburden expenditures up until May 26, 2014. The Third Department's recent decisions in St. Lawrence III and Chemung are well- reasoned, well-supported resolutions of the issues in the appeals between the counties and Respondents, are fully consistent with this Court's recent decision in County of Niagara, and address Respondents' primary concern - an open-ended liability - by establishing a deadline by which the counties must submit their claims. This Court should therefore follow suit, and modify the lower court's decision to comport with the Third Department's decision. Notably, the Third Department has expressly rejected Respondents' main argmnent on this appeal - that Petitioner lacks the right to challenge Section 61. Distilled to its essence, Respondents' argmnent challenges Petitioner's capacity, as a municipality, to seek to invalidate State legislation. Respondents, however, waived this argmnent by failing to assert it in their answer or otherwise raise it below. In any event, based upon the Third Department's prior holding in Matter of Krauskopf v Perales (139 AD2d 147 [3d Dept 1988]), Respondents' admissions in this proceeding, and the Third Department's decisions in St. Lawrence III and Chemung, there is no dispute that Petitioner has asserted a proprietary interest in a specific fund of money and, therefore, one of the four exceptions to the general rule barring municipal challenges to State legislation is applicable. Thus, as a matter of law, Petitioner has capacity to bring this proceeding. For these reasons and those set forth more fully below, Petitioner respectfully requests that this Court modify and, as so modified, affirm the Supreme Court judgment consistent with the Third Department's well-reasoned decisions in St. Lawrence III and Chemung. 3 COUNTERSTATEMENT OF FACTS New York's Medical Assistance program malces Petitioner, and other counties throughout the state, responsible for providing Medical Assistance to eligible patients (Record on Appeal ["R"] 32-33). Although New York originally required the counties to pay fifty percent of Medical Assistance costs not covered by federal payments, commonly known as the counties' "local share," in the 1980s, the Legislature recognized that this policy would dramatically increase the total Medical Assistance costs that the counties would incur (R 32-34). To mitigate this overwhelming burden, the Legislature eliminated the counties' obligation to pay a local . share of the Medical Assistance costs and required Respondents to reimburse the counties for the local shares paid by the counties for Medical Assistance provided to certain indigent, mentally disabled persons (R 34). As part of this fiscal relief enactment, the Legislature amended Social Services Law § 368-a to add subdivision (1 )(h), which provides counties withfitll reimbursement for their local shares for this category of Medical Assistance recipients, !mown as "overburden" recipients (id). Respondents, not the counties, were directly billed by the service providers for the costs of the Medical Assistance services rendered to the overburden recipients (see Matter of County of St. Lawrence v Daines, 81AD3d212, 218 [3d Dept 2011] ["St. Lawrence l"], lv denied 17 NY3d 703 [2011]). Since Respondents made payments directly to the providers, 'only Respondents could verify the costs. Without providing any verification of the costs, Respondents automatically collected the local shares from Petitioner, on a weekly basis, and deposited them into a special bank accolmt maintained by the State Comptroller (R 294). In the mid-1990s, Respondents improperly changed the codes on the State-owned computer system for certain categories of individuals for whom the counties were not fiscally responsible, including overburden recipients (R 607-609, 613-622). Respondents admit that 4 they, not Petitioner, were responsible for identifying and coding the overburden individuals (R 295-296). Furthermore, Respondents have never disputed that they were solely responsible for the failure to properly code these recipients on the state computer system nor have they provided an explanation as to how it happened (R 295-297, 614, 618-621, 625-627). As a result of the improper coding, Respondents failed to reimburse Petitioner and the other counties, and concealed their obligation to do so (see St. Lawrence I, 81 AD3d at 218). As they did in St. Lawrence I, Respondents contend here that Petitioner could have discovered the improper coding by reviewing limited, pro forma statistical repo1is and other data that Respondents purportedly provided to Petitioner (Brief for Appellants ["Resps' Br."], at 4-5). The reports and data provided by Respondents, however, do not list or otherwise disclose which individuals Respondents improperly failed to code as overburden, or provide any other notice to Petitioner that certain individuals either had not been properly coded or had been decoded (R 296-299, 316, 619-621). Without receiving any notice of the improper coding from Respondents, there was no reason for Petitioner to suspect that overburden eligible individuals were missing from the State's computer system and the pro forma statistical reports. This is particularly true since Respondents destroyed records that would have assisted in identifying the uncoded overburden recipients (R 622), and have abjectly refused to turn over other relevant documents (R 133-144, 622-623). Absent Respondents' identification of the uncoded individuals and disclosure of the relevant records, it was impossible for Petitioner arid the counties to identify the unpaid overburden reimbursement (R 618-621). In April 2005, Respondents took yet another step to avoid their unambiguous overburden reimbursement obligation. Without any notice to the counties, Respondents summarily ordered the Office of Temporary arid Disability Assistance ("OTDA") to suspend any and all processing or payment of overburden reimbursements to the counties (R 36, 609). Thus, even if Petitioner 5 and the counties knew of the unpaid overburden reimbursement (which they did not) and could have identified any of the unpaid overburden reimbursement (which they could not), there would have been no means for them to recover the unpaid overburden reimbursement from Respondents. In sum, Respondents have refused to voluntarily pay a single overburden reimbursement claim to any county since at least March 2005, if not earlier (as suggested by Respondents' litigation history and the record evidence) (R 609-612, 628-633). The Medicaid Cap Statute In 2005, the Legislature adopted a "cap" methodology to limit, in subsequent calendar years, the total amount of Medical Assistance expenses that the counties were required to pay to Medical Assistance-eligible patients in the first instance (see L 2005, ch 58, pt C, § 1 [hereinafter, the "Medicaid Cap Statute"]). The basic principle of this cap methodology was to use 2005 as a base year for a county's total Medical Assistance expenditures, and to then guarantee that future expenditures did not increase umeasonably above that amount (see id. § l[b]-[d]). Notably, the Medicaid Cap Statute incorporated the overburden reimbursement obligation prospectively, effective January 1, 2006, while leaving it unchanged retrospectively (R 66). As such, after adoption of the Medicaid Cap, Respondents remained liable to reimburse the counties 100% of their local shares paid prior to January 1, 2006 on behalf of overburden-qualifying mentally disabled persons (id.). Related Prior Litigation In 2006, Respondents arbitrarily denied the counties' claims for overburden reimbursement, forcing those counties to challenge Respondents' denial of reimbursement in a series of expensive lawsuits (R 66-68). In those litigations, Respondents initially argued that the counties' claims for overburden reimbursement were barred by the Medicaid Cap Statute (R 67). 6 This Court properly rejected that argument, holding that the Legislature "did not intend [the Medicaid Cap Statute] to be retroactively applied" (Matter of County of Herkimer v Daines, 60 AD3d 1456, 1457 [4th Dept 2009], lv denied 13 NY3d 707 [2009]). Within days after this Court's decision, Respondents began denying overburden reimbursement claims on timeliness grounds, including on the basis that the claims allegedly were not submitted in accordance with the time requirements of 18 NYCRR § 601.3 (see Matter of County of Niagara v Daines, 79 AD3d 1702, 1705 [4th Dept 2010], lv denied 82 AD3d 1719 [4th Dept 2011], lv denied 17 NY3d 703 [2011]; St. Lawrence I, 81 AD3d at 216). This Court rejected both of these arguments, holding that the Medicaid Cap Statute only applies prospectively, and that Section 601.3 time limits do not apply to these reimbursement claims (County of Niagara v Daines, 79 AD3d at 1703, 1705; see also St. Lawrence I, 81 AD3d at 216-217). In St. Lawrence I, Respondents made, and the Third Department rejected, the identical argument as presented in this appeal; namely, Petitioner should have submitted the otherwise "stale" reimbursement claims earlier based upon the limited pro forma statistical reports allegedly provided by Respondents (compare R 297-299 with R 542-544). While these first two rounds of litigation were still pending, the Legislature, in 2010, amended the Medicaid Cap Statute to provide that "the state/local social services district relative percentages of the non-federal share of medical assistance exp~nditures incurred prior to January 1, 2006 shall not be subject to adjustment on and after July 1, 2006" (L 2010, ch 109, pait B, § 24). In effect, this amendment locked in a county's percentage share for the cost of Medicaid services at the figure calculated under the cap (R 67). In or ai·ound 2010, the counties again submitted overburden reimbursement claims to Respondents (R 68). Respondents denied those reimbursement claims, this time on the basis that the 2010 Amendment extinguished the counties' right to reimbursement (id.). 7 As a result, the counties were forced to commence litigation to compel Respondents to make the reimbursements. After many courts throughout the state once again rejected Respondents' arguments, the Third Department in St. Lawrence II rejected Respondents' reliance on the 2010 Amendment (see St. Lawrence II, 95 AD3d at 1553-1554). In its decision, this Court cogently explained why Respondents could not retroactively avoid their statutory reimbursement obligation to the counties under Social Services Law§ 368-a: [I]t has been the state's statutory obligation to pay the county-share for Medicaid · . expenditures incurred in providing medical services to. certain mentally disabled individuals. While the state, and not the county, has been obligated to pay for these medical services, it has continued to charge petitioner for these expenses and used these funds to satis./Y its obligations under this statute. Since the state was never entitled to these funds, the 2010 amendment, even if found to apply to overburden expenditures, cannot serve to transform these county fimds into state property and relieve the state of the legal obligation to return them. . . . This Court has previously held that "prior to 2006, upon payment to DOH for services provided to overburdened patients for which no local share was owing, petitioner's right to reimbursement for such expenditures accrued" (Matter of St. Lawrence County v. Daines, 81 A.D.3d at 216, 917 N.Y.S.2d 330). Thus, the 2010 amendment, even if it was intended by the Legislature to repeal Social Services Law§ 368-a (l)(h), cannot serve to relieve the state of its obligation to refund the counties for these expenditures made prior to January 1, 2006 (id [emphasis added]). This Court similarly rejected Respondents' arguments (see Matter of County of Niagara v Daines, 91 AD3d 1288, 1289 [4th Dept 2012], lv denied 94 AD3d 1481 [4th Dept 2012]). Nevertheless, Respondents continued to reject claims on the basis of the 2010 Amendment until after the Third Department issued its decision in St. Lawrence II (95 AD3d 1548 [3d Dept May 17, 2012]) (R 347, 630-634). The refusal by Respondents to reimburse the counties from 2006 to 2012 resulted in nine appellate decisions compelling Respondents to honor their statutory duty (see Matter of County of St. Lawrence v Shah, 95 AD3d 1548 [3d Dept 2012]; Matter of County of Niagara v Daines, 91 AD3d 1288 [4th Dept 2012]; Matter of County of Erie v Daines, 96 AD3d 1432 [4th Dept 2012]; Matter of County of Herkimer v Daines, 83 AD3d 1510 [4th Dept 2011]; Matter of 8 County of Erie v Daines, 83 AD3d 1506 [4th Dept 2011]; Matter of County of St. Lawrence v Daines, 81 AD3d 212 [3d Dept 2011]; Matter of County of Niagara v Daines, 79 AD3d 1702 [4th Dept 2010]; Matter of County of Herkimer v Daines, 60 AD3d 1456 [4th Dept 2009]; Matter of County of Niagara v Daines, 60 AD3d 1460 [4th Dept 2009]). As is the case in the instant appeal, Respondents in the nine prior appellate cases did not dispute that the State had failed to reimburse the counties for overburden local share payments improperly talcen prior to 2006. Notably, despite these decisions directing Respondents to reimburse the counties for certain overburden recipients, Respondents have to date abjectly failed to correct the coding for these recipients, in apparent defiance of a number of court orders, including Supreme Court, Niagara County's order in Matter of County of Niagara v Daines (Sup Ct, Niagara County, Kloch, Sr., J., Feb. 18, 2010, Index No. 137680) (R 615-617). The undisputed and intentional refusal to properly code individuals to date has allowed and will continue to allow Respondents to reap enormous windfalls (beyond the admitted windfall of refusing to reimburse for pre-2006 payments at issue in this and prior litigations) at the expense of Petitioner and the counties (R 615-617, 620-621). Section 61 of the 2012 Executive Budget Law After all of Respondents' prior legal arguments to avoid the State's undisputed debt to the counties failed, Respondents resorted to a new tactic--asking the Legislature to pass an unambiguously retroactive statute in an attempt to extinguish permanently the counties' vested rights to reimbursement, despite the Third Department's express warning in St. Lawrence II that Respondents could not do so (R 37-39). Section 61 expressly provides that "[n]otwithstanding the provisions of section 368-a of the social services law or any other contrary provision of law, no reimbursement shall be made for social services districts' claims submitted on and after the 9 effective date of this paragraph, for district expenditures incurred prior to January 1, 2006" (R 299). Section 61 was introduced to the Legislature on January 17, 2012 and became effective upon its enactment on April l, 2012 (Resps' Br., at 8-9; R 305). At the time Section 61 was introduced, therefore, Respondents still were rejecting overburden claims based upon the 2010 Amendment (R 305, 346-347). Respondents' suggestion that they voluntarily paid overburden claims between the introduction of Section 61 and its enactment, a purported due process grace period (Resps' Br., at 11, 17, 27-28), therefore, is patently false (R 345-347, 630-634). Thus, no grace or limitations period was afforded to the counties to allow them to identify and seek unpaid overburden reimbursement (R 39). Recent Overburden Claims Submitted On or about November 12, 2013, Petitioner submitted a claim for overburden reimbursement to Respondents in the total amount of $426,630.15 (R 197-202). By form letter, Respondents denied the claims in its entirety, based solely on the retroactive application of Section 61 (R 203-204). Thus, Respondents' actions once again left Petitioner with no alternative but to challenge the deprivation of its reimbursement rights in the courts. The Supreme Court Judgment On May 22, 2014, Supreme Court, Cayuga County (Clark, J.) issued an Order and Judgment declaring Section 61 of the 2012 Executive Budget unconstitutional, arinulling the determination of Respondents to deny Petitioner's claims for overburden reimbursement, and directing Respondents to pay Petitioner's claims in the total amount of $426,630.15 (R 8-16). Respondents appealed from the Supreme Court order (R 4-6). 10 ARGUMENT POINT I PETITIONER HAS CAP A CITY TO CHALLENGE SECTION 61 Respondents assert that Petitioner, as a subdivision of the State, is not a "person" with due process rights vis-a-vis the State, and thus can never have a remedy with respect to the overburden reimbursement owed under Social Services Law§ 368-a, which they claim has been repealed by implication (Resps' Br., at 18-23). This new argument fails for three reasons. First, despite Respondents' mischaracterization of this argument as relating to the merits of Petitioner's vested rights and due process claims, the ability of a municipality to assert constitutional claims against the State is an issue of capacity to sue. The Third Department in St. Lawrence 111 explicitly confirmed this principle, holding "despite respondents' argument to the contrary, their assertion that petitioner, as a political subdivision of the state, can have no due process claim against its creator, is essentially a challenge to petitioner's capacity" (St. Lawrence Ill, 124 AD3d at 91). This Court seemingly reached the same conclusion in its recent County of Niagara decision when it remitted to the lower court the issue of whether Respondents waived the capacity defense. Respondents, here, however, waived capacity as a defense by failing to plead it in their Verified Answer. Second, even if the failure to raise capacity as an affirmative defense could be ignored, Respondents' new argument was not raised before Supreme Court below, thereby denying Petitioner the opportunity to contest it on the facts and law. Thus, the argument is unpreserved for appellate review and should not be considered by this Court. Finally, even if this argument were not indisputably waived and unpreserved, it fails as a matter of law because it is well established that a municipality may assert constitutional claims against the State when, as here, it does so in its proprietary, as opposed to governmental, capacity. In fact, Respondents have 11 essentially conceded that if the issue is one of capacity, Petitioner's claims are not baned. (Resps' Br., at 21-22). To preclude Petitioner from seeking judicial review of the Legislature's attempt to "wall off' Respondents' prior undisputed obligations to Petitioner, as Respondents would have it, merely because Petitioner is a political subdivision is contrary to law and would impermissibly afford the State unbridled authority to legislate away its debts whenever it no longer desired to pay them. Thus, this Court should flatly reject Respondents' waived aud unpreserved argument that Petitioner lacks capacity to challenge the unconstitutional deprivation of its vested aud due process rights, as did the Third Department. A. Respondents Cliallenge Petitioner's Capacity to Bring tliis Proceeding. Respondents contend that Petitioner's due process aud vested rights claims fail because Petitioner, as a political subdivision of the State, cau never assert a due process or vested rights claim against the State (Resps' Br., at 18-23). Contrary to Respondents' mischaracterization of this argument, it is beyond cavil that the ability of a municipality to bring constitutional claims against the State is au issue of capacity to sue, which must be raised as an affirmative defense. Respondents' argument to the contrary is, at best, a fundamental misstatement of the law. In addition to being directly controverted by the legion of cases in which New York courts have uniformly treated this issue as one of capacity to sue, Respondents' argument also must fail because the law is clear that municipalities are entitled to due process of law under the New York State Constitution, and have capacity to assert those rights against the State when acting in a proprietary capacity. The general rule is that "municipalities aud other local governmental corporate entities aud their officers lack capacity to mount constitutional challenges to acts of t11e State aud State legislation" (City of New York v State of New York, 86 NY2d 286, 289 [1995] [emphasis added]). 12 Capacity, however, is a threshold issue that "concerns a litigant's power to appear and bring its grievance before the court" (New York Blue Line Council v Adirondack Park Agency, 86 AD3d 756, 758 [3d Dept 2011], app dismissed 17 NY3d 947 [2011], Iv denied 18 NY3d 806 [2012], quoting Matter of Graziano v County of Albany, 3 NY3d 475, 478-479 [2004] [internal quotation marks and citation omitted]), and does not speak to the merit of the underlying claim. It is well settled that there are four exceptions to the general rule that a municipality does not have capacity to sue the State. One of the exceptions applies where, as here, the State legislation adversely affects a municipality's proprietary interest in a specific fund of moneys (City of New York, 86 NY2d at 291-292; see also County of Rensselaer v Regan, 173 AD2d 37, 40 [3d Dept 1991], affd 80 NY2d 988 [1992]; Matter of Town o.f Moreau v County of Saratoga, 142 AD2d 864, 865 [3d Dept 1988]). The very existence of these exceptions to the capacity general rule, which are articulated in the only decision cited by Respondents (see Jeter v Ellenville Cent. School Dist., 41 NY2d 283 [1977]), undermines Respondents' contention that a municipality is incapable of asserting a due process/vested rights claim against the State as a matter of substance. Respondents nonetheless conflate the threshold rule cited above with the merits of Petitioner's constitutional claims. Respondents' argument is based entirely upon the line of cases that the Court of Appeals in City of New York comprehensively collected, discussed, and explicitly held to be limited to the waivable issue of capacity to sue (see City of New York, 86 NY2d at 289-290 [collecting and discussing cases] ["Viewed, therefore, by the courts as purely creatures or agents of the State, it followed that municipal corporate bodies cannot have the right to contest the actions of their principal or creator affecting them in their governmental capacity or as representatives of their inhabitants" (emphasis added)]). In fact, the main decision on which Respondents rely (see Resps' Br., at 22-23, citing Jeter, 41 NY2d at 287) cites the same 13 line of cases, all of which note the distinction between a municipality's governmental and proprietary functions. For example, the Court of Appeals in Jeter cited Matter of County of Cayuga v McHugh ( 4 NY2d 609 [1958]) in support of its holding that the municipalities could not raise "these constitutional challenges" (Jeter, 41 NY2d at 287). In County of Cayuga, the Court of Appeals held that Cayuga County could not raise a due process challenge to a determination closing a jail because the determination did not "deprive the county of any property rights" (County of Cayuga, 4 NY2d at 616). The courts of this State have uniformly treated this issue as one of capacity to sue and contemporaneously acknowledged that a municipality has substantive due process and other constitutional rights against the State that may be asserted under one of the four enumerated exceptions to the general rule (see City of New York, 86 NY2d at 291-292). Notably, this includes decisions specifically addressing a municipality's right to bring a due process claim against the State seeking to invalidate an act of the Legislature (see Village of Herkimer v Axelrod, 58 NY2d 1069, 1071 [1983] [treating State's challenge to political subdivision's due process claim as a capacity/standing defense]; Gulotta v State, 228 AD2d 555, 556 [2d Dept 1996] [holding that municipalities lacked capacity to assert due process and equal protection claims because none of the four exceptions to the general rule applied], citing Jeter, 41 NY2d at 287; City of New York v Lawton, 128 AD2d 202, 206 [3d Dept 1987]; Herzog v Board of Educ. of Lawrence Union Free School Dist., 171 Misc 2d 22, 26-27 [Sup Ct, Nassau County 1996] [holding that municipality lacked capacity to bring a due process clain1]). That Respondents ai·e, in fact, raising capacity was most recently affirmed by the Third Department inMatter of County of Nassau v State of New York (100 AD3d 1052 [3d Dept 2012], lv dismissed 20 NY3d 1092 [2013]). There, the Third Department held that the County lacked the legal capacity to challenge the constitutionality of a statute because "municipal entities 14 generally 'cannot have the right to contest the actions of their principal or creator affecting them in their governmental capacity or as representatives of their inhabitants'" (id at 1054-1055 [emphasis added], quoting City of New York, 86 NY2d at 290). Notably, the Third Department explicitly based its determination upon a finding that none of the four exceptions to the general incapacity rule applied (id, citing, inter alia, Jeter, 41 NY2d at 287). Where one of the enumerated exceptions to the general threshold capacity rule applies, Respondents essentially concede that a municipality may bring a constitutional claim against the State (Resps' Br., at 21-22). For example, in Purcell v Regan (126 AD2d 849 [3d Dept 1987], lv denied 69 NY2d 613 [1987]), the Third Department held that the County of Nassau could challenge a state statute on constitutional grounds because it did not do so in its governmental capacity (id at 850). Similarly, in Matter of City of N£:V11 York v Lawton (128 AD2d 202 [3d Dept 1987]), the Third Department held that a municipality had capacity to assert a constitutional claim against the State because it claimed "entitlement to a specific fund" and, therefore, was asserting its proprietary, as opposed to governmental, rights (id. at 206). In short, Respondents' suggestion that a municipality may never bring a due process or vested rights claim against the State is a fundamental misstatement of the law (see e.g. Matter of Crespo, 123 Misc 2d 862, 866 [Sup Ct, New York County 1984]; Rivera v Laporte, 120 Misc 2d 733, 740 [Sup Ct, New York County 1983]; see also e.g. Township of River Vale v Town of Orangetown, 403 F2d 684, 686 [2d Cir 1968]). Rather, a municipality's ability to assert due process and vested rights claims against the State is a threshold issue of capacity (see Gulotta, 228 AD2d at 556). Respondents' new argument on appeal ignores the well-settled rule that a municipality may challenge the constitutionality of a statute in its proprietary, as opposed to governmental, capacity, and therefore should be rejected by this Court. 15 B. Respondents Waived the Capacity Defense. It cannot be disputed that lack of capacity is an affirmative defense that is waived if it is not pled in an answer or otherwise raised by motion (see CPLR 321 l[a][3], [e]; City of New York v State of New York, 86 NY2d at 292; see also Town of Delhi v Telian, 119 AD3d 1049, 1050 [3d Dept 2014]; Andrews, Pusateri, Brandt, Shoemaker & Roberson, P.C. v Niagara County Sewer Dist. No. I, 71AD3d1374, 1375 [4th Dept 2010]). In fact, the Third Department recently confirmed this well-established principle in both St. Lawrence III and Chemung (Chemung, 2015 NY Slip Op 00267, at * 1 ["Respondents' challenge to petitioner's capacity to bring this claim was waived by respondents' failure to raise capacity as a defense in their answer or a pre-answer motion to dismiss"]; St. Lawrence III, 124 AD3d at 91). Here, as in St. Lawrence III and Chemung, Respondents failed to plead lack of capacity in their Verified Answer (R 282-287). Thus, Respondents have waived their lack of capacity argument, and this Comt should decline to consider it (see Town a/Delhi, 119 AD3d at 1050 ["inasmuch as defendant can no longer raise the issue of plaintiffs capacity to sue in this action (due to waiver), plaintiffs arguments regarding its capacity have been rendered academic, and we decline to address them"]). In an attempt to avoid their clear waiver, Respondents rely solely on the reference by the Court of Appeals in Jeter to a municipality's '"substantive right to raise' a due process challenge" (Resps' Br., at 22-23, quoting Jeter, 41 NY2d at 287). The Court's reference in Jeter to the "substantive right" to sue, however, is a precise reference to the municipality's legal capacity to sue, as conclusively indicated by the Court's statement-in the subsequent sentence-that the municipalities did not have the "substantive" right to sue because none of the recognized exceptions to the capacity rule applied (Jeter, 41 NY2d at 287). In contrast, one of the recognized exceptions indisputably applies here and, therefore, Respondents' reliance on Jeter is inapposite. Thus, as the Third Department held in St. Lm11rence III, Respondents' 16 argument is in fact a baseless capacity defense that they plainly waived by failing to assert it as an affirmative defense in their answer (see City of New York, 86 NY2d at 292). Even if Respondents had not waived their lack of capacity argument, their failure to raise it before Supreme Court at any time during the proceedings below renders it unpreserved for appellate review (see Stiver v Good & Fair Carting & Moving, Inc., 32 AD3d 1209, 1211 [4th Dept 2006], ajfd 9 NY3d 253 [2007]; Ring v Jones, 13 AD3d 1078, 1079 [4th Dept 2004]). Thus, Respondents should not be permitted to raise their unpreserved argument here, and this Comi should decline to consider it. C. Petitioner has Capacity to Challenge Section 61 as a Matter of Law. Even ignoring Respondents' waiver and failure to preserve their capacity argument, it carmot be disputed that Petitioner fits within the long-standing exception that a political subdivision has capacity to challenge State legislation where "the State legislation adversely affects a municipality's proprietary interest in a specific fund of moneys" (City of New York, 86 NY2d at 291-292). The key factor in determining the existence of a specific fund for purposes of this exception is whether the monies have already been collected by the State, which has indisputably occurred here (see County of Rensselaer v Regan, 173 AD2d 37 [3d Dept 1991], ajfd 80 NY2d 988 [1992]). In County of Rensselaer, the Third Depaiiment notably held that the counties had capacity to sue "because they [were] asse1iing a proprietary claim of entitlement to a specific fund, namely, their entitlement to receive all of the fines, forfeitmes and penalties collected by the courts in proceedings on the offenses specified in the STOP-DWI legislation" (id at 40 [emphasis added]). Here, Petitioner's proprietary right is even more concrete because Respondents admit that DOH took Petitioner's money (the local share payments) and placed that money into "a special bank account maintained by the State Comptroller" (R 294). It is in that specific fund in which 17 Petitioner has a proprietary interest, and from which Petitioner's overburden reimbursement should have been paid. Thus, Respondents' admission alone is dispositive of Petitioner's capacity to challenge the retroactive deprivation of Petitioner's vested overburden reimbursement rights. In any event, the Third Department already has held that municipalities have a property interest in the overburden funds collected by the State. Specifically, in Matter of Krauskopfv Perales (139 AD2d 147 [3d Dept 1988], qffd 74 NY2d 730 [1989]), the Third Department held that the overburden local shares paid by social services districts and held by Respondents constitute a specific fund within the meaning of the exception to the general incapacity rule (id. at 153). The Third Department's decision, addressing a local social services district's proprietary interest in the State's specific fund for overburden reimbursement, is directly on point here. This Court should thus follow the Third Department's guidance and reject Respondents' challenge to Petitioner's capacity. POINT II SECTION 61 IS ONLY CONSTITUTIONAL IF CONSTRUED AS A LIMITATIONS PERIOD FOR THE RECOVERY OF OVERBURDEN REIMBURSEMENT A. This Court Should Adopt the Third Department's Interpretation of Section 61. It is well settled that where, as here, two statutory provisions relate to the same subject matter, they must be construed together to effectuate the statutory purposes of each (see Alweis v Evans, 69 NY2d 199, 204 [1987]; see also Matter of Albany Law School v New York State Off of Mental Retardation & Dev. Disabilities, 19 NY3d 106, 121 [2012] ["Statutes that relate to the same subject are in pari materia and should be construed together unless a contnll'y intent is clearly expressed by the Legislature." (internal quotation marks omitted)]; St. Lawrence ll, 95 AD3d at 1552). Indeed, "[t]he repeal of a statute by implication is not favored by law, for when 18 the legislature intends to repeal an act it usually says so expressly" (Pines v State of New York, 115 AD3d 80, 97-98 [2d Dept 2014], appeal dismissed 23 NY3d 982 [2014], quoting Matter of Tiffany, 179 NY 455, 457 [1904]). "The absence of an express provision in a later statute, for repeal of an earlier one, gives rise to a presumption that repeal was not intended" (Cimo v State of New York, 306 NY 143, 148-49 [1953]). "If by any fair construction, both statutes can be given operation, implied repeal will not be declared" (Pines, 115 AD3d at 98, quoting Cimo, 306 NY at 149). Thus, a statute cannot be "deemed impliedly modified by a later enactment unless the two are in such conflict that both cannot be given effect. If by any fair construction, a reasonable field of operation can be found for [both] statutes, that constrnction should be adopted" (Matter of Consolidated Edison Co. of NY. v Department of Envtl. Conservation, 71 NY2d 186, 195 [1988] [internal quotation marks omitted]). As the Third Department held in St. Lawrence III, Social Services Law § 368-a and Section 61 may be read together and applied haimoniously to effectuate the purposes of each. Social Services Law § 368-a unambiguously entitles Petitioner to 100 percent reimbursement for all overburden local share payments made prior to January 1, 2006 (see Social Services Law § 368-a[l][h][i] ["There shall be paid to each such district ... Beginning January first, nineteen hundred eighty-four, one hundred per centum of the amount expended for medical assistance for those individuals who are eligible pursuant to section three hundred sixty-six of this article as a result of a mental disability . . . after first deducting therefrom any federal funds properly received or to be received on account thereof." (emphasis added)]). Petitioner's right to reimbursement vested when Petitioner paid its overburden local share to the State prior to January 1, 2006 (see St. Lawrence II, 95 AD3d at 1553-1554 ["Since the state was never entitled to these funds, the 2010 amendment, even if found to apply to overburden expenditures, [could not] serve to transform these county funds into state property and relieve the state of the legal 19 obligation to return them" (emphasis added)]; St. Lawrence I, 81 AD3d at 216 ["petitioner's right to reimbursement for [Medical Assistance] expenditures accruerf' "prior to 2006, upon payment to DOH for services provided to overburdened patients for which no local share was owing" (emphasis added)]). Section 61 does not explicitly or implicitly repeal any part of Social Services Law § 368- a. Had the Legislature intended to eliminate Respondents' reimbursement obligation entirely, it would have repealed that provision, or used language that expressly eliminated all overburden reimbursement (see Alweis, 69 NY2d at 204 ["Obviously, the judiciary should not lightly infer that the Legislature has repealed one of its own enactments when it has failed to do so expressly; the Legislature is hardly reticent to repeal statutes when it means to do so."]). It chose not to do so, however. Instead, as the Third Department held, the intent of Section 61 was to provide the State with financial certainty by imposing a statute of limitations on the payment of Petitioner's claims for overburden reimbursement (see St. Lawrence III, 124 AD3d at 92 ["The 2012 amendment did not specifically repeal any part of Social Services Law § 368-a or affect the counties' inherent right to reimbursement. Rather, the amendment simply imposed a statute of limitations for the payment of claims for such reimbursement."]). Notably, Respondents concede that a statute of limitations for reimbursement claims was intended (Resps' Br., at 27). As so construed, Section 61 does not impair Petitioner's unquestionably vested right under Social Services Law § 368-a, but only extinguishes the remedy through which Petitioner may enforce that right (see Matter of Paver & Wildfoerster [Catholic High School Assn.], 38 NY2d 669, 676 [1976] ["it has been said long ago and many times since that the Statute of Limitations only bars the remedy; it does not impair the underlying right"]). Thus, the Third Department's interpretation of Section 61 is consistent with the construction expressly intended by the Legislature-that it "shall not be construed to alter, change, affect, impair or defeat any 20 rights, obligations, duties or interests accrued, incuned or confened prior to the effective date of this act" (L 2012, ch 56, part D, § 65[k]). Significantly, the Third Department's decision comports with the prior decision in County of Niagara v Daines, where this Court rejected Respondents' construction of the 2010 Amendment to "defeat[ ] their preexisting duty to reimburse petitioner for the overburden expenditures" because this precise language unambiguously preserved Petitioner's preexisting rights (County of Niagara v Daines, 91 AD3d at 1289; see also Matter of Monroe County Pub. School Dists. v Zyra, 51AD3d125, 131 [4th Dept 2008] ["the rules of statutory construction require that we avoid rendering statutory language superfluous"], lv denied 52 AD3d 1293 [4th Dept 2008]). Contrary to Respondents' attempt to manufacture a conflict, the Third Department's construction of Section 61 is also consistent with this Court's recent holding in Matter of County of Niagara v Shah (122 AD3d 1239 [4th Dept Nov. 14, 2014]). As in St. Lawrence III, fu County of Niagara v Shah, this Court held that "section 61 has retroactively changed the law" by extinguishing "petitioner's right to submit claims for reimbursement of overburden expenditures made prior to 2006"-i.e., the remedy through which Petitioner could recover the reimbursement owed pursuant to Social Services Law § 368-a (id [emphasis added]). This Court rejected Supreme Court, Niagara County's interpretation of Section 61 because it would have nullified the Legislature's intended effect. The Court's Niagara decision does not conflict with the Third Department's order granting mandamus to compel Respondents to satisfy their unambiguous statutory reimbursement duty under Social Services Law § 368-a to identify and pay the total outstanding overburden liability, as Respondents claim. This Court in County of Niagara reversed Supreme Court, Niagara County's decision granting the county mandamus relief based upon an inappropriate application of the special facts exception. Because this Court held, as did the Third 21 Department, that the special facts exception does not apply, this Court's decision was limited to a holding that granting mandamus relief based on the law existing before and without regard for Section 61 was improper (see id at 1242-1243). Contrary to Respondents' argument, however, this Court did not hold that Section 61 repealed Respondents' reimbursement obligation under Social Services Law § 368-a in its entirety or finally determine that mandamus relief can never be granted. Instead, this Court merely rejected an alternative interpretation of Section 61 that would have rendered it a nullity and remitted the matter to Supreme Comt, Niagara County for consideration of the constitutionality of the Section 61 (see id. at 1244). The Third Department's interpretation, however, resolves this Court's concern. Construed as a statute of limitations eliminating Petitioner's remedy for recovery of overburden reimbursements, Section 61 can be given its intended effect to close the books on pre-2006 overburden reimbursement claims, as this Court recognized, while also preserving the legislative intent of Social Services Law § 368-a to provide 100 percent reimbursement to Petitioner and the other counties. Construed otherwise, Section 61 can only be read to extinguish Petitioner's vested rights to overburden reimbursement retroactively, contrary to the intent of the Legislature and in violation of the Constitution. Thus, it is this Court's duty, as it was the Third Depaitment's, to construe Section 61 in the only manner that will preserve its constitutionality, as imposing a final limitations period for the recovery o.f the overburden reimbursement unambiguously provided under Social Services Law § 368-a (see Loretto v Teleprompter Manhattan CATV Corp., 58 NY2d 143, 149 [1983] ["the section is to be construed so as to sustain its constitutionality ... if possible"]; H Kauffman & Sons Saddlery Co. v Miller, 298 NY 38, 44 [1948] ["Where the language ofa statute is susceptible of two constructions, the [courts] will adopt that which avoids injustice, hardship, constitutional doubts or other objectionable results."]). 22 As the Third Department held, however, the limitations period imposed cannot run for the two and a half-month period from the date that Section 61 was introduced to its effective date, as Respondents suggest. Indeed, the Court of Appeals has already rejected Respondents' exact argument, holding that the time period between legislation's passage and effective date cannot serve as a grace period to satisfy the strictures of due process (see Gilbert v Ackerman, 159 NY 118, 123-124 [1899]). In order to provide constitutionally adequate due process before a retroactive deprivation of Petitioner's vested rights to overburden reimbursement, Section 61 was required, at the very least, to provide a reasonable grace or limitations period for submission of claims after it became effective (see Brothers v Florence, 95 NY2d 290, 301 [2000] ["Where, as here, however, there is no legislatively prescribed grace period, a court may uphold the constitutional validity of the retrospective application of the new statute by interpreting it as authorizing suits upon otherwise time-barred claims within a reasonable time after the statute's effective date" (emphasis added)]; Roman Catholic Diocese of Albany, NY. v New York State Workers' Compensation Bd., 96 AD3d 1288, 1290 [3d Dept 2012] ["With respect to legislation that is 'retroactive' in the sense that it shortens a limitations period for claims that accrued prior to the statute's effective date, due process is satisfied when the Legislature expressly sets a reasonable grace period" (internal quotation marks and citation omitted)]). Section 61 did no such thing. Instead, it barred Petitioner's claims for reimburse,ment immediately when it became effective, without any grace period at all. Because Section 61 did not provide a grace period for the final submission of overburden reimbursement claims, the Third Department exercised its discretion and determined that a six- month limitations period running from the date of its decision - November 26, 2014 - was wauanted in order to preserve the statute's constitutionality (see id ["Where, as here, however, there is no legislatively prescribed grace period, a court may uphold the constitutional validity of 23 the retrospective application of the new statute by interpreting it as authorizing suits upon otherwise time-barred claims within a reasonable time after the statute's effective date."]). As the Third Department recognized, a grace period generally applicable to all counties across the state, including Petitioner here, was preferable in order to avoid what would otherwise be an unpredictable scheme of different periods running for each county in the state. The Third Department's decision provides substantial justice for the counties, while also giving the State the financial certainty it sought through Section 61 particularly by virtue of a truncated grace period. Therefore, this Court should modify and, as so modified, affirm the Supreme Court order consistent with the Third Department's decision in St. Lawrence III and Chemung. B. Respondents' Interpretation of Section 61 Violates General Construction Law § 93. As the Third Department held in St. Lawrence II, General Construction Law § 93 protects Petitioner's right to reimbursement for overburden local share payments taken prior to 2006, notwithstanding the State's attempts to legislate away that right (see St. Lawrence II, 95 AD3d at 1553-1554). This is especially true here, where Respondents assert that Section 61 effectively repeals Social Services Law § 368-a's reimbursement obligation for those payments, notwithstanding that Petitioner's rights under that statute vested long before the enactment of Section 61 (see General Construction Law § 93 ["The repeal of a statute or part thereof shall not affect or impair any ... right accruing, accrued or acquired ... prior to the time such repeal takes effect"]; St. Lawrence II, 95 AD3d at 1553-1554; St. Lawrence I, 81 AD3d at 216; County of Herkimer v Daines, 60 AD3d at 1457). Because Petitioner's right to reimbursement vested long before Section 61 was enacted to purportedly extinguish the reimbursement remedy, and is protected by General· Construction Law § 93, this Court should reject Respondents' interpretation of Section 61. Application of General Construction Law § 93 is especially appropriate in this case 24 because Respondents argue that Section 61 repeals the entire reimbursement obligation contained in Social Services Law § 368-a by implication. It cannot be disputed that Respondents' interpretation of Section 61, if adopted, would have wide-ranging repercussions on Petitioner's vested rights to reimbursement. Under Respondents' impermissibly expansive view, Petitioner would be deprived of reimbursement for all pre-2006 overburden payments taken by Respondents, simply because Respondents unlawfully failed to comply with their statutory reimbursement duty in the first instance and now do not wish to pay (R 304-305). This Court can avoid that impermissible result, and satisfy the directive of General Construction Law § 93, however, by adopting the Third Department's reasonable interpretation of the plain language of Section 61-that Section 61 operates as a statute of limitations the expiration of which bars Petitioner's remedy for recovery under its vested rights to overburden reimbursement. In so doing, Petitioner's vested rights to the overburden reimbursements are preserved, the purpose of General Construction Law § 93 is satisfied, and Section 61 is given its intended effect. As the Third Department held in St. Lawrence II, and again in St. Lawrence III, this Court should construe Section 61 to prevent the State from unilaterally legislating away its undisputed reimbursement debt to Petitioner without first satisfying the demands of due process (see St. Lawrence III, 124 AD3d at 91-93 St. Lawrence II, 95 AD3d at 1553-1554). POINT III SECTION 61 IS UNCONSTITUTIONAL BECAUSE IT RETROACTIVELY DEPRIVES PETITIONER OF ITS VESTED RIGHT TO REIMBURSEMENT Should this Court decline to interpret Section 61 as a limitations period consistent with the Third Department's decision, the Supreme Court order should be affirmed, because Section 61 retroactively deprives Petitioner of its vested right to overburden reimbursement. Respondents argue that the Legislature is permitted to extinguish Petitioner's vested right to 25 overburden reimbursement retroactively because the balance of factors articulated by the Comt of Appeals in Alliance of Am. Insurers v Chu (77 NY2d 573, 585-586 [1991]) to determine whether vested rights may be impaired by retroactive legislation "decisively" tips in their favor (Resps' Br., at 24). Respondents are mistaken. As the Third Department expressly cautioned in St. Lawrence II, Petitioners' vested rights to reimbursement cmmot be abrogated retroactively, even if legislation does so expressly (see St. Lawrence II, 95 AD3d at 1553-1554). That the Third Department's conclusion with respect to Respondents' interpretation of the 2010 Amendment was made in dictum does not undermine its rationale. Indeed, Respondents talce the same position here that they did in the prior cases before this Court and the Third Depmtment- that a retroactive statute extinguishes the State's undisputed reimbursement debt (see id.; see also County of Niagara v Daines, 91 AD3d at 1288-1289). Thus, no basis exists to impugn the Third Department's rationale in St. Lawrence II that a retroactive enactment, such as Section 61, carmot extinguish Petitioner's vested rights to overburden reimbursement. A. Section 61 Unconstitutionally Deprives Petitioner of its Vested Property Right to Reimbursement. Section 61 is an unambiguously retroactive law, and should be viewed with skepticism (see e.g. Matter of Chrysler Props. v Morris, 23 NY2d 515, 521 [1969]). As aptly restated by the Court of Appeals, "[f]or centuries our law has harbored a singular distrust of retroactive statutes" (James Sq. Assoc. LP v Mullen, 21NY3d233, 246 [2013] [internal quotation marks and citation omitted]). Respondents do not dispute that the Legislature's authority to enact retroactive laws is substantially constrained (see Alliance, 77 NY2d at 585-586). Nor do they dispute that where, as here, a statute retroactively impairs vested rights, a rational basis for the law simply is not enough to sustain it (id at 586; see Matter of Hodes v Axelrod, 70 NY2d 364, 369-370 [1987]; Franza v Olin, 73 AD3d 44, 46 [4th Dept 2010]). "This doctrine reflects the 26 deeply rooted principles that persons should be able to rely on the law as it exists and plan their conduct accordingly and that the legal rights and obligations that attach to completed transactions should not be disturbed" (Alliance, 77 NY2d at 586). Indeed, "[t]he integrity of the State government, upon which the public is entitled to rely, requires, at the very least, that the State keep its lawfully enacted promises" (id at 577). This Co mi and the Third Department have previously concluded that Petitioner's right to reimbursement for overburden local share payments is a vested right. In County of Herkimer v Daines (60 AD3d 1456 [4th Dept 2009]), for example, this Court acknowledged that "petitioner had rendered services in accordance with the law in existence at the time, and those transactions were complete" (id at 1457). This Court also, in County of Niagara v Daines, explicitly held that the 2010 Amendment could not be construed to defeat Respondents' "preexisting duty to reimburse petitioner for the overburden expenditures" because the statute, like Chapter 56, pmi D of the 2012 Executive Budget Bill here, "'shall not be construed to alter, change, affect, impair or defeat any rights, obligations, duties or interests accrued, incurred or conferred prior to the effective date of this act'" (County of Niagara v Daines, 91 AD3d at 1289, quoting L 2010, ch 109, part B, § 40[c]; see also L 2012, ch 56, part D, § 65[k] [using precisely the same language to preserve vested rights]; St. Lawrence II, 95 AD3d at 1553 ["(s)ince the state was never entitled to these funds, the 2010 amendment, even if found to apply to overburden expenditures, [could not] serve to transform these county funds into state property and relieve the state of the legal obligation to return them" (emphasis added)]). Similarly, in St. Lawrence I, the Third Department explained that "petitioner's right to reimbursement for (Medical Assistance) expenditures accrued" "prior to 2006, upon payment to DOH for services provided to overburdened patients for which no local share was owing" (St. Lawrence I, 81 AD3d at 216 [emphasis added]). This Court relied on St. Lawrence I when it held 27 that the State's retroactive application of an amendment to the Empire Zone Act violated the plaintiffs due process rights (see James Sq. Assoc. LP v Mullen, 91 AD3d 164, 172 [4th Dept 2011), affd21NY3d233 [2013)). Thus, at a minimum, this Court has interpreted St. Lawrence I as establishing a county's constitutionally protected right in pre-2006 overburden reimbursement (see People v ME., 121AD3d157, 160 [4th Dept 2014] [citing Matter o,fCounty of Herkimer v Daines (60 AD3d 1456, 1457 [4th Dept 2009), lv denied 13 NY3d 707 [2009)) in discussion regaTding improper retroactive statutes). Social Services Law § 368-a(l )(h) provides Petitioner with an immediate property interest in the reimbursement owed by Respondents. Section 61 now purports to retroactively deprive Petitioner of these reimbursements. Just as this Court and the Third Department have held with respect to the 2010 Amendment, however, Section 61 cannot now "transform these county funds into state property and relieve the state of the legal obligation to return them," because the State "was never entitled to these funds" in the first place (St. Lawrence II, 95 AD3d at 1553 [emphasis added]). Accordingly, Respondents' reliance on Section 61 to deprive Petitioner retroactively of its vested right to reimbursement must fail (see id). Additionally, numerous comts throughout the State have recently held just that, including the Supreme Courts in Broome County, Chautauqua County, Chemung County, Delaware County, Genesee County, Jefferson County, Monroe County,, Oneida County, Orleans County, Schuyler County, and St. Lawrence County (see Addendmn). New York precedent fully supports these courts' recent holdings, as New York courts consistently uphold vested rights against retroactive abrogation in circumstances similar to this case. For example, in Alliance, the Court of Appeals invalidated an amendment to the Insurance Law because the amendment retroactively deprived the plaintiffs-a nmnber of insurance companies, trade associations, and individual insurance policy holders-of their constitutionally protected "property rights" in the 28 earnings of a statutorily-created Property and Liability Insurance Security Fund to which they had previously contributed (77 NY2d at 577-578). Specifically, the Comi held that, with respect to "contributions already made," the State could not extinguish the contributors' property rights by "repealing the provision which [gave] rise to [them]" (id at 585). Respondents concede that that is precisely what Section 61 purports to accomplish, and thus it too must fail (see James Square Associates LP, 21 NY3d at 250; Caprio v New York State Department of Taxation and Finance, 117 AD3d 168, 178 [1st Dept 2014] [holding that retroactive application of amendments to Tax Law violated plaintiffs' due process rights]). B. Petitioner's Vested Rights to Overburden Reimbursement Are Not Subject to Retroactive Impairment. To avoid the clear retroactive deprivation of Petitioner's vested rights, Respondents argue that the balance of factors weighs in favor of Section 61 's constitutionality because (1) Petitioner should have calculated and submitted reimbursement claims, notwithstanding: (i) Social Services Law § 368-a's clear language placing the burden solely on Respondents; (ii) the Third Department's unambiguous holding in St. Lawrence I that Petitioner was not required to do so; and (iii) Respondents' admission that they could not calculate the "unknown and unlmowable" liability themselves (R 291, 308, 310); (2) the benefits that Petitioner has purportedly received since 2006 under the Medicaid Cap Statute somehow make up for the pre-2006 overburden reimbursements that Respondents unlawfully withheld from Petitioner for approximately three decades and the continuing benefits Respondents receive at Petitioner's expense due to Respondents' refusal to properly code overburden individuals to this very day (R 301-303); (3) allowing Petitioner to collect both the post-2006 Cap "benefits" and pre-2006 unpaid overburden reimbursements would result in a supposed windfall; ( 4) Petitioner misinterpreted the law regarding its statutory right to reimbursement, notwithstanding that numerous comis, including 29 this Court, repeatedly confirmed Petitioner's interpretation and rejected Respondents' attempts to avoid the State's longstanding and undisputed reimbursement debt, and Petitioner should have assumed that the Legislature would eventually succeed in extinguishing its vested rights retroactively; and ( 5) the State's interest in fiscal certainty-that is, allowing it to extinguish its outstanding debts by legislative fiat whenever it no longer desires to pay-outweighs Petitioner's right to reimbursement (Resps' Br., at 23-36). As set forth below, under the factors articulated in Alliance, Respondents' assertions are without merit. 1. Section 61 is Manifestly Unfair. The fairness factor significantly favors Petitioner. Petitioner has been deprived of reimbursements that it was statutorily entitled to receive, solely due to Respondents' actions. During the six years in which Respondents contend that Petitioner should have talcen some action - 2006 to 2012 - Respondents did not voluntarily pay a single overburden reimbursement claim (R 630-634, 345-347). During the same six year period, despite being made aware of the improper coding on their computer system, they did nothing to ascertain the amount owed to Petitioner and the other counties, let alone fully satisfy their statutory duty to reimburse Petitioner and the counties (R 348-360, 612-621). Thus, it was only due to Respondents' own failures that Petitioner's rights were impacted by Section 61. Moreover, the purported post-2006 benefits manufactured by Respondents are entirely irrelevant to the reimbursements Respondents owe to Petitioner under Social Services Law § 368-a for pre-2006 overburden payments improperly taken by Respondents. As explained more fully below, the Medicaid Cap Statute, which did not become effective until January 2006, is a prospective statute that affects only the manner in which Respondents' post-2006 obligations to Petitioner are paid (see Point III[B][3], iyifra). Respondents' pre-2006 obligations to Petitioner remain governed by Social Services Law§ 368-a-a statute that was adopted in 1984 30 and has not been repealed by Section 61. Therefore, as this Court already held in County of Herkimer v Daines, the Medicaid Cap Statute only impacts Petitioner's ability to submit claims to recoup overburden payments made after January 1, 2006, when the Medicaid Cap Statute became effective (see County of Herkimer v Daines, 60 AD3d at 1457). Respondents' reliance on the purported benefit of the Medicaid Cap Statute also is misplaced since there is no dispute that they failed to include the unpaid overburden reimbursement in Petitioner's 2005 base year Medicaid Cap calculation. This means that, from the implementation of the Medicaid Cap in 2006 to date, Petitioner has paid significantly more than it should have in Medical Assistance expenses each year and will continue to do so unless and until the cap is properly recalculated (R 620, 625-628). Respondents will continue to receive the annual benefit of the miscalculation regardless of this Court's decision regarding the pre- 2006 reimbursement. Respondents have further benefitted, at the expense of Petitioner and the counties, by failing to credit Petitioner and the counties with an enormous sum of overburden reimbursement accruing each year to date. Again, both of these windfalls could be remedied by a simple program to identify and properly code overburden recipients. Respondents chose not to fix that pro bl em. Respondents' contention that Petitioner purportedly receives certain protections under the Cap Statute that render Section 61 "fair" is entirely irrelevant. For example, Respondents assert that the Cap "shields" Petitioner from contributing to judgments rendered in favor of providers (Resps' Br., at 28). Respondents fail to cite any authority in support of this statement which, in any event, is a completely speculative benefit that could not possibly compensate Petitioner and the counties for the millions that Respondents have unlawfully withheld. Respondents' further suggestion that the legislative process leading up to the enactment of Section 61 was all the process due to Petitioner is simply incredible. First, there is absolutely 31 no proof in the record to support Respondents' contention that Petitioner and other counties "lobbied vigorously against the 2012 amendment" (Resps' Br., at 30). Second, Respondents' contention that, in a two and a half-month period between introduction and enactment, Petitioner and the other counties could have somehow identified all overburden-eligible individuals for whom they were not reimbursed and used this information to submit unnecessary claims to DOH (Resps' Br., at 31-32), wholly ignores Respondents' (1) own contention that these reimbursements are purportedly "unlmown and unlmowable" (R 291 ); (2) repeated complaints regarding the burdens of calculating these amounts (R 307-308); (3) failure to accomplish this task despite having approximately thirty years to do so; and (4) vigorous denial of all such reimbursement claims during that two-and-a-half-month period. Indeed, as demonstrated above, the Court of Appeals has specifically rejected Respondents' argument that the period between a statute's introduction and effective date can suffice as a constitutionally adequate grace period (see Gilbert, 159 NY at 123-124). Respondents' unsuppmted claim that due process has been satisfied because Petitioner purportedly has been able to submit the allegedly "stale" claims for reimbursement since the 1990s (Resps' Br., at 26-27), similarly should be rejected. Respondents again attempt to improperly shift their clear statutory burden of reimbursement onto Petitioner. As the Third Department expressly recognized in St. Lawrence III and St. Lawrence I, Petitioner had no obligation to submit claims for reimbursement, and has only been compelled to do so due to the State's failures (see St. Lawrence III, 124 AD3d at 92 ["DOH was required to pay those reimbursements even without any claims being made, and should have done so by 2006."]; St. Lawrence I, 81 AD3d at 218 n 2). Moreover, Respondents have delayed for decades in calculating and paying the reimbursement indisputably owed to Petitioner, and were the only ones capable of actually identifying the dropped codes, uncoded recipients, and unpaid 32 reimbursement in the first place (R 406-407, 598-599, 618-620). Thus, absent identification by Respondents of the uncoded individuals and disclosure of the relevant records, it was impossible for Petitioner and the counties to identify all the unpaid overburden reimbursement. It also should be noted that Respondents made this precise argument-that Petitioner should have previously submitted its reimbursement claims-in St. Lawrence I. In that case, the Third Department rejected Respondents' argument that St. Lawrence County had failed to timely submit its reimbursement claims (see St. Lawrence I, 81 AD3d at 218). In support of their timeliness argument in St. Lawrence I, Respondents submitted the Affidavit of Nicholas Meister sworn to December 3, 2009 (the "Meister Affidavif') (R 535-553). When the Meister Affidavit (R 542-544) is compared to the Affidavit of Robert LoCicero sworn to September 26, 2013 and submitted in the instant proceeding (the "LoCicero Affidavit") (R 297-299), it is clear that Respondents' argument in this proceeding as to the counties' purported ability to identify umeimbursed overburden expenditures and the alleged "staleness" or timeliness of the reimbursement claims is identical to the argument previously asserted in St. Lawrence I. 2. Petitioner Properly Relied on Its Clear Entitlement to Overburden Reimbursement Under Social Services Law § 368-a. The reliance factor similarly weighs heavily in Petitioner's favor. Reliance is analyzed at the time the local share payments were made by Petitioner to Respondents. Prior to 2006, it was entirely reasonable for Petitioner to rely on the plain language of Social Services Law § 368-a, which expressly states that Respondents shall reimburse Petitioner for all overburden local share payments (see Social Services Law§ 368-a[l][h][i]). Petitioner's interpretation of the law was repeatedly confirmed by this Court and the Third Depmiment (see St. Lawrence II, 95 AD3d at 1553; County o,fNiagara v Daines, 91 AD3d at 1289; St. Lawrence I, 81 AD3d at 216; County of Herkimer v Daines, 60 AD3d at 1457). Thus, Respondents' contention that Petitioner had 33 "ample forewarning that its claims might be extinguished" (Resps' Br., at 31) is meritless. In any event, it would not have been reasonable at any time for Petitioner to expect that the State, after taldng the overburden local share payments, would simply refuse to pay its creditors. The State lacks the authority to simply abrogate its own debts whenever it determines it no longer desires to pay them, especially when doing so deprives Petitioner of its vested rights to reimbursement (see e.g. O'Neil v State of New York, 223 NY 40, 43-44 [1918); see also Rhem v Malcolm, 507 F2d 333, 341 n 20 [2d Cir 1974]). Respondents cannot justify this unabashed attempt to extinguish their prior debts to Petitioner by citing their own erroneous interpretations of the Medicaid Cap Statute and 2010 Amendment, which were properly rejected by all comts that have considered them. Respondents' suggestion that, to avoid their own baseless attempts to eradicate the State's overburden reimbursement liability, Petitioner should have submitted reimbursement claims simply defies logic. As the Third Department explicitly recognized, Petitioner had no obligation to submit claims, or to take "any action to receive reimbursement for overburden expenses" from DOH (see St. Lawrence I, 81 AD3d at 214 [emphasis added]). In fact, DOH's Deputy Director for Administration admits that Petitioner has no obligation to submit reimbursement claims (R 307). Respondents admit, instead, that it was their responsibility to "identify] those Medicaid recipients who were mentally disabled nnder the applicable overburden criteria" (R 295; see R 307, 322). Respondents have failed to satisfy this responsibility for decades and, in fact, still have no intention of doing so, to the further expense of Petitioner and the counties (see R 307-309). Even if it was Petitioner's duty to calculate the reimbursements and submit claims (which it is not), Petitioner was never provided with all the information it would need from DOH in order to make these calculations and, due to Respondents' suspension of claim processing in April 2005, Petitioner effectively was denied the 34 opportunity to submit reimbursement claims (R 609, 622-623). Simply stated, Petitioner's actions or inactions since 2006 are irrelevant. Since 2005, there has not been a single instance when Respondents paid an overburden reimbursement claim without being compelled to do so through litigation, including during the two and a half months between Section 61 's proposal and effective date that Respondents tout as a "grace period." Thus, Petitioner's reliance on the express reimbursement obligation contained in Social Services Law § 368-a, which still has not been repealed to date, when paying the overburden local share payments to Respondents prior to 2006 was entirely reasonable. 3. The Extent of Section 61 's Retro activity is Excessive. Respondents assert that Section 61 is a prospective amendment because it bars claims submitted after April 1, 2012. This argument is incredible in light of Respondents' persistent arguments that Section 61 is and was intended to be expressly retroactive, and seeks to deprive Petitioner and other counties, in 2012, of reimbursement for payments taken and concealed by Respondents as far back as 1984 (R 304, 308). Inasmuch as Respondents argue that Section 61 extinguishes over 30 years of overburden reimbursement liability, it is unquestionably significantly retroactive. Respondents seek to avoid the expressly retroactive language of Section 61 by claiming that it merely "clarifies" that the Medicaid Cap---a wholly separate statnte, which first went into effect on January 1, 2006-retroactively extinguishes Petitioner's vested right to reimbursement for overburden payments taken by Respondents prior to Janum-y 1, 2006 (Resps' Br., at 32-35). To "clarify," however, means to make plain something that already exists, but is ambiguous (see Merriam-Webster's Collegiate Dictionary, at 228 [11th ed 2004] [defining "clarify" as "to free of confusion" or "to malce understandable"]). The Legislatnre cmmot "clarify" that, contrary to the 35 holdings of this Court and the Third Depaiiment, the Medicaid Cap Statute is retroactive when the statute was not made retroactive in the first instance. By its very terms, the Medicaid Cap Statute is effective as of January 1, 2006 and, therefore, applies only to expenditures incurred from Januai·y 1, 2006 forward (see Dorfinan v Leidner, 76 NY2d 956, 959 [1990]). The statute contains no language, much less a clear expression of intent, indicating that it should be applied retroactively, nor does it even mention the overburden obligation. In fact, the Medicaid Cap Statute is loaded with prospective terms indicating that it can only be applied going forward (see e.g. L 2005, ch 58, paii C, § l[c] "[c]ommencing with the calendar year beginning January 1, 2006, calendai· year social services district medical assistance expenditure ainounts for each social services district shall be calculated by multiplying the results of the [cap] calculations" [emphasis added]). Further, in the prior overburden litigations, this Court and the Third Department extensively analyzed this language and the legislative history underlying the Medicaid Cap Statute, and each time concluded, contrary to Respondents' suggestion, that the prior enactment was not intended to retroactively deprive Petitioner of its vested right to reimbursement (see St. Lawrence I, 81 AD3d at 215; County of Herkimer v Daines, 60 AD3d at 1457). In fact, all of the comis that have considered the language and legislative history of the Medicaid Cap Statute have reached the same conclusion: the Medicaid Cap Statute did not supplant the provisions of Social Services Law § 368-a as it pertains to overburden payments made prior to 2006. Respondents do not, and cannot, point to any language or legislative history of the Med'icaid Cap Statute that supports their post-hoc argument in this proceeding that a retroactive impairment of Petitioner's vested rights to reimbursement was intended all along (see Matter of Thomas v Bethlehem Steel Corp., 63 NY2d 150, 154-155 [1984] [after reviewing the legislative history, and finding an "absence of clear legislative indication that the statute be applied 36 retrospectively," determining that statute should not be given retroactive application]). Instead, Respondents solely rely on the legislative history of Section 61, a separate statute, to support their interpretation. As a result, even if Respondents' contention that Section 61 is a "clarifying amendment" were correct (which it is not), Respondents' position still fails. A "'clarifying' amendment ... cannot retroactively declare a different legislative intent contrary to the plain meaning of the earlier law" (Boltja v Southside Hosp., 186 AD2d 774, 775 [2d Dept 1992]; see also Matter of Roosevelt Raceway v Monaghan, 9 NY2d 293, 304 [1961]; Matter of Island Waste Servs., Ltd. v Tax Appeals Trib. of State of NY., 77 AD3d 1080, 1083 n 2 [3d Dept 2010], lv denied 16 NY3d 712 [2011]). Respondents suggest that the Legislature's Memorandum in Support of Section 61 indicates that the intent of Section 61 was to "clarify" that the Legislature previously extinguished Petitioner's statutory right to reimbursement. The Legislature's purported "clarification," however, is entirely inconsistent with the intended prospective application of the Medicaid Cap Statute; as such, Section 61 cannot have merely "clarified" the Legislature's original intent. Thus, the Legislature's belated pronouncement of its purported prior intent in support of Section 61 is wholly ineffective to change the plain, unambiguous language of the Medicaid Cap Statute (see Roosevelt Raceway, 9 NY2d at 304 ["(t)he Legislature has no power to declare, retroactively, that an existing statute shall receive a given construction when such a construction is contrary to that which the statute would ordinarily have received"]; Boltja, 186 AD2d at 775; Island Waste Servs., 77 AD3d at 1083 n 2). Moreover, even assuming, arguendo, that Respondents were correct that Section 61 is a clarifying amendment (which, again, it is not), Section 61 would overturn this Cami's precedent, and the precedent of numerous courts across the state, merely to Clarify that the Medicaid Cap Statute unconstitutionally deprives Petitioner of its preexisting rights to reimbursement under Social Services Law § 368-a. Notably, Respondents do not, and cannot, point to any case where 37 an amendment clarifying that a prior statute was intended to abrogate a preexisting right has been upheld as constitutional. Under Respondents' construction, the Medicaid Cap Statute fares no better than Section 61, because the Medicaid Cap, which went into effect on January 1, 2006, also would retroactively impair Petitioner's vested rights to reimbursement for overburden payments. As this Court and the Third Department have held, at the time that the Medicaid Cap went into effect, Petitioner's right to reimbursement under Social Services Law § 368-a had already vested (see St. Lawrence I, 81 AD3d at 216; County of Herkimer v Daines, 60 AD3d at 1457). Therefore, even if Section 61 merely clarifies that the Medicaid Cap Statute unconstitutionally impairs Petitioner's vested rights to reimbursement for overburden payments, Section 61 cannot have a rational basis and should be invalidated by this Court. 4. The Public Interest Requires Reimbursement of the Improperly Retained Overburden Payments to Petitioner. Without citing any legal authority, Respondents claim that the purported public interest served by the law is to provide the State with certainty that it can avoid its overdue debts (see Resps' Br., at 35-36). There is no authority in suppo1t of this purpmted interest because it is not the type of ovelTiding public interest that is compelling enough to deprive Petitioner of its constitutionally protected property rights. To the contrary, the Court of Appeals recently held that the State's budgetary concern is not a "valid public purpose" for retroactive application of a statute (James Sq. Assoc., 21 NY3d at 249-250; see also Caprio, 117 AD3d at 178). In fact, permitting Respondents to avoid their clear statutory obligation to reimburse Petitioner would disserve the public interest, because it would encourage DOH and other agencies to (1) avoid timely compliance with their statutory obligations; (2) engage in dilatory tactics, including interminable litigation, to frustrate these obligations; and (3) lobby the Legislature to retroactively change any statutes with which they do not wish to comply, without providing any 38 notice to those affected, in hopes that the agencies could ultimately avoid their obligations entirely. In order to serve the true public interest here, Respondents must be compelled to reimburse Petitioner's overburden payments to the county taxpayers from whom they were improperly taken. Thus, inasmuch as the balance of the factors set forth in Alliance weighs heavily in favor of preserving Petitioner's vested rights against Section 61 's attempt at retroactive extinguishment, this Court should alternatively declare Section 61 unconstitntional and affirm the Supreme Court order. CONCLUSION For the foregoing reasons, Petitioner respectfully requests that this Court modify the Order of Supreme Court, Cayuga County consistent with the holding of the Third Department in St. ·Lawrence 111 and Chemung, and, as so modified, affirm the order in its entirety, or alternatively simply affirm the Supreme Court order, and award Petitioner such other and further relief as this Court deems just and proper. Dated: February 9, 2015 Albany, New York By: WHITE7, OSTERMAN & HANNA LLP Christopher E~key, Esq. Robert S. Rosborough IV, Esq. One Commerce Plaza Albany, New York 12260 (518) 487-7600 . NANCY ROSE STORMER, P.C. Nancy Rose Stormer, Esq. Michael Bagge, Esq. 1325 Belle Avenue Utica, New York 13501 (315) 797-0110 Attorneys for Respondent 39 ADDENDUM Matter of County of Broome v Shah Index No. 2014-0090 PRESEN'J.': HONORABLE JEFFREY A. TAIT JUSTICE PRESlDlNG STATEOFNEWYORK , SUPREME COURT: COUNTY OF BROOME In the Matter of COUNTY OFB:ROOME, Petltioner-Plalntiff, F01· a Judgment Pw·suant to Article 78 of the CivJI Practice Law and Rules and a Declaratory Judgment Pursuant to Section 3001 of the Civil Practice Law and Rules -against- NIRA V R. SHAH, M.D.1 M.l'.H., as Commissfoner of the New York State Department of Health and THE NEW YORK STATE DEPARTMENT OF HEAUrH, Respondents-Defendants. APPEARANCES: Christopher E, Buckey, Esq. White, Osterman &; Hanna, LLP Attorneys for Petitioner-Plaint{ff One Commerce Plaza Albany, NY 12260 Nancy Rose Stormer, Esq. Nancy Rose Stormer, P.C, Attorneys for Pelltioner-Plaintijf' l 3 25 Belle Avemie Utica, NY 13501 At a Term of the Supremo Court of th<:> State of New York, held in and for the Sixth Judiolal District, nt the Broome County Courthouse, in the City of Binghamton, New York on the 11th day of March 2014. DECISION AND ORDER Index No. 2014-0090 !Ml No. 2014.Q071·M C, Hiurls Dague, Esq. Assistant Attorney General Attol'neys for Respondent-Defendan1 Y,he Capital Albany, NY 12424-0341 HON. JEFFREY A. TJU):', J.S.C. This matter is before the Cointon the hybrid CPLR Article 78 proceeding and plenary action commenced by Petitioner.Plaintiff County of B1·oome (County) seeking to compel reimbursement for certain Medlcal Assista4ce costs from Respondents-Defendants Nirav R. Shah, M.D., M.P.H., as Commissioner of Je New York State Department of Health, ruid the New York State Department of.Health (together refe11·ed to as State). In opposition, the State submits an Answer to the Article 78 clalms and moves for summary judgment dismissing the County's declaratory judgment and state law plonru.y claims. Argument.I of the Parties The County asseJts thatbelween January l, 1984 and December 31, 2005 lt incurred expenses on the State's behalfforthe treatment ofcertain mentally disabled Medical Assistance recipients, known as "overburden expenses,"' The County claims that the State has refused to reimburse it for those expenses, which total at least$ l ,170,022,83 and the State is obligated to pay pursuant to Soclal Services Law § 368-a.' The Co\lllty asserts that it transferred County funds to fue State to satisfy the cost of treating these individuals on a weekly basis, and the State was then respo.11sible for identifying those who satisfied the overburde11 criteria and reimbt\rsing the County for the costs of their treatment pursuant to Social Services Law§ 368-a. A detailed recitation of the hllitory of and interplay between Social Servi cos Law§ 368-a and the 2005 Medioaid cap legislation and the 20l 0 amendment thereto, as well as the related litigation regal'dlng the impact on the payment/reimbursement of overburden expenses, is contained in the papers submitted by botl1 the County and the State and thus will not be repeated here. ·-···-·. ' . ·-----··-··-- ···-----··--····-----··-·-----.. -----· .. ---- . ------ On this application, the County seeks~n Order: annullh1g the State's Deeember20, 2013 determination denying its claims for reil~bursement for pre-2006 overburden expenses; compelling the Smte to approve and pay its claims Jn that regard; eomjlolling the St/I.le to calculate and pay the total remaining overburden reimbursements due; declaring Section 61 of Part D of Chapter 56 of !he Laws of 2012 (Section 61) unoonstitutional; awarding the County damages of no less than $1, 170,022.83; imposing a oonstruotive trust over such funds owed by the State; and awarding the County costs, disbwseinents, and counsel fees. The State's primary m·gumentin opp~sition to the County's claims is that Section 61 bars reimbursen1ent of the ovel'burden expenses sought by the County. Section 61 provides: Notwithstanding the provisio11s of section 368"a of the social services law or any other contrary provjision oflaw, no relmbursementshall be made for social services dislt)icts' claims submitted on and after the effective date of this paragrapli., for district [overburden] expenditures incurred prior to January 1, 2b06 , , , The State submits the affidavit of Robert LoCicero, the Deputy Director for Administration with the New York State Department of Health, who states that the purpose of Section 61 was to address prior litigation' and "to 'wall-off' any further potential State liability for sucl1 overburden reimbursement claims that were s11brnitted on or after the provision's Prompted by the State's prior refusals to reimburse counties for pre-2006 ove!'burden expenses, with the State fJrSt relying on the 2005 Medkaid cap legislation ( effootive J '1111llll'Y [, 2006) and then on the 2010 amendment thereto as a basi~ to deny the elaims. The State claimed both bimed reimbursement for pre·2006 overburden expenses. This led tu several rounds of litigation by multiple counties, with courts uniformly rejecting the State's interpretation of the Medicaid cap and later amendment and oorpelling reimbursement of pre"2006 overburden expenses p1>rsu011.t to Social Services Law§ 368-a (see Mattera/County q(St. Lawrence v. Shah, 9 $ AD3d 1548 [3 d Dept 2012] [2010 amendment to the Medi ca id cap statute did not relieve State of its obligation to reimburse counties for overburden expenditures made prior to tbatsta!ule's effective date]; Matter ofCoimty of Niagara v. Daines, 91 AD3d 1288 [4th Dept 2012]), 2 effective date of Aprill, 2012" (see LoCicei·o affidavit at 'jj 50). The State frru:nes Section 61 as a "clarifying amendment" meant to make it clear that the State b not permitted to make reimbursement payments to county social service districts for pre-2006 overburden expense claims. In reply, the County argues tbat Section 61 is not merely a "clru:ifylng amendment" and instead amoun.ts to a substantive deprivatlon of its ve9ted right to reimbursement of the ! overburden expenses which is being retroaciively applied. The County points out that severnl courts have rneently found Section 61 unconstitutional (see Matter• of County of Si. Lawrence v. Shah, Sup Ct, St. 1awrenoe County, August 30, 2013, Demarest, J., Index No. 0141656; Matter of Chautauqua Count,yv. Shah, Sup Ct, Chautauqua County, Decetnber9, 2013, Chimes, J., Index No. 2013-1266; Matter of County of Jefferson v. Shah, Sup Ct, Jefferson County, .J'anuary 15, 2014, Gilbert, J., Index No, 2013·1956; Maller of County of Oneida v. Shah, Sup Ct, Oneida County, Febrnary 28, 2014, C*l-, J., Index No. 2013-1788; see also Matier of Chemung County vs. Shah, Sup C~ Chemung County, November 19, 2013, O'Shea, J., Index No.: 2013-1849 [annulling State's denial o~Cou11ty's overburden reimbursement chums and ' granting Petition to ailow such clalms]; Maffer O;fCount,y of Niagara v. Shah, Sup Ct, Niagara County, June 18, 2013, Panepinto, J., Iudexlnt of "claitt'IS submitted" and does not impact the State's statutory obligation to calculate thi; total reimbm"semellt liability under Sooial Sei'Vices Law § 368-a and pay1be Coullty the amount owed. Analysis As noted above, multiple recent Supreme Court decisions involvingtlte identical issues presented here have held that the State cannot rely on Section 61 to deny oounties' claims for 3 reimbursement of overburden expenses and/or have found Section 61 unconstitutional. Those courts have reasoned that because the County's right to reimbursement and repayment of the overburden expenses has already accrued, Seotio116! cannot retroactively relieve the Steteofits obligation to payihose funds, The State assetts fuat many of thosd decisions are based at least in part on the Third Department's holding in Matter of County Js1. Lawrance v, S/urh (see id., 9S AD3d at 1548), I The Smte argues that holding was based largely on the Third Department's view that the State was attempting to repeal Social Services Law § 368-a by lmpllcation,4 The State asse1ts that both the text and legislative history' of Section 61 rectify any perceived deficiency in that regard. However, the Third Department went on to conclude that the 2010 amendment to the Medicaid cap statute could not relieve the State of its obligation to reimburse counties fer overburden expenses even if it was intendedjto repeal Social Services Law § 368-a, reasoning: I Since the state was never! entitled to these funds, the 2010 amendment, even if found to apply to overburden expenditures, cannot serve to 1ransform these county funds into state property and relieve the state of the legal ojlligatioll to retum them (see Id. at 1554 [citing its prior holding that 1ihe county's right to reimbursement of pre-.2006 overburdenexpensds accrued upon paymentto the State for services provided to overburdened patients for which no local share was owing]), ' Since neither the 2010 amendment t6 the Medicaid cap nor its legislative history t·efors to the State's obligation to reimbmse counties for pre-2006 overburden expenditures and the amendment does not explicitly repeal Social Sen~ces Law§ 368-a(l)(h). ' fo that regard, its legislative history nqtes that Section 61 "is necessary to address adverse court decisions that J1ave reS\lltcd in State eosts paid to local dlstricts fo1· pre·(Medioaid]cap periods, wMoh conflict with the original intent of the local cap statute." 4 In light of the foregoing, based on these cases, and particularly the reasoning set forth in Matter of County of SI, Lawrence v, Shah, ~upra, the State cannot rely on Section 61 to deny the County's claims for reimbursement of pre· 2006 overburden expenses. Conclm!on The State's December 20, 2013 determination denying the County's claims for i reimbursement of overburden expenses is annulled as arbitrary, capricious, and/or affected by en or of law, The County's request for an Order compeUlng the State to approve and pay such chums is ~anted as follows: the State Is directed to pay the County's cl&ims for relmbu1·sement of overburden expenses totaling $1,170,022,83,6 or provide proof that any or all of those Glaims are eitber inaccurate or not legitimate, and t-o calculate and pay any remaining overburden expense1•elmbursements due under Social Services Law§ 368-a within 30 days of service of this Decision and Order wlth notice of entry, The County's requests for costs, disburseme!lts, and counsel foes and imposition of a coru;tructive t!'ust are denied. The State's motion fur summary judgment is denied, This Decision shall also constitute U1cl Order of the Court pursuant to rnle202.8(g) of the Unlfol'Ul Rules for the New York State Trial CoUl'ts and it is deemed ente1-ed as of the date The State acknowledges that the County submitted claims on or about September 27, October 3, and November 18, 2013 totaling $1,170,022.00 for relmbnrsement of pre-2006 overburden expenses and that it disallowe(ll those claims based on Section 61 (see LoCicero affidavit at §§ 53-54). Thero is 110 indicatitn that the State had any objection to the amO\lllt sought; rather, the State's oppositio.n to re'imbursement seems to be based entirely on the appHcation of Section (Jl, 5 below, T6 com111ence the statutol'y time p~riod for appeals as of right (CPLR 5513[n]), a copy of this Decision ru1d Order, together with notice of entry, must be served upon all parties. : Dated: June 12, 2014 Binghamton, New York 6 Most or all of the documents upon which this Decision and Order is based were received by Chambers in a scanned electrortlo f01mat from the Broome County Clerk's Office and the origlna!B remain filed with the Eroome Co1lllty Clerk. Therefor~, except as noted below, !lo documents have been forwarded to the Broome County Clerk with this Decision and Order. Documents forwarded to the Broome County Clerk with this Deoislon and Order: Nono Matter of County of Chautauqua v Shah Index No. 2013-1266 : ' SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF CHAUTAUQUA In the Matter of COlJN'fY OF Cl:UAUT A:UQUA, Petitioner-Plaintiff, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules and a Declaratory Judgment Pursuant to Section 3001 of the Civil Practice Law and Rules -against- NIR.A V R, SHAH, M.D., M.P.H., as Commissioner of the New York State Department of Health and THE NEW YORK STATE DEPARTMENT OF HEALTH, Respondents-Def.endants. , ORDER AND JUDGMENT ~c1s - rz.&1'> Index No.: eV-2013•1'11'8 Hon. Deborah A. Chimes WHEREAS; Petitioner County of Chautauqua ("Petitioner") commenced the above- captioned hybrid CPLR Article 78 proceeding and plenary action by Verified Petition and. Complaint, dated September 6, 2013, seeking, among otherthings, to compel Respondents Nirav R. Shah, M.D;, M.P.H., as Commissioner of the New York State Department of Health and the . . New York State Department of Health ("DOH") (collectively "Respondents") .to reimburse Petitioner for a total of $217,967.75 in certain Medical Assistance costs commonly known as Human Services Overburden ("Overburden") pursuant to State law, to compel Respondents to calculate and pay the total Overburden liability owed to Petitioner, and to declare Section 61 of Part D of Chapter· 56 of the Laws of 2012 ("Section 61 ")unconstitutional; WHEREAS, Respondents served their Verified Ansv_;er and. supporting Affidavit of Robert LoCicero swom to September 26; 2013 in response to the Verified Petition and Comp.laint on September 30, 2013, and moved for summary judgment on Petitioner's deolaratory judgment and state law plenary claims, arguing that Respondents were no longer obligated to reimburse Petitioner for the claims asserted in this proceeding because Section 61 extinguished Petitioner's right to reimbU1'sement for pre-2006 Overbiuden costs under Social Services Law § 368-a; WHEREAS, Petitioner served tbe Reply Affirmation of Nancy Rose Stormer dated November 8, 2013 and the Affidavit of Christopher E. Buckey swom to. November 8, 2013 on November 8, 2013 and opposed Respondents' motion for summary judgment on its declaratory judgment and state law plenary claims. Petitioner contended that Section 61 did not extinguish Petitioner's right to reimbursement' for pre-2006 Overburden costs under Social Services Law § 368·a because: (!) insofor as Section 61 attempts to deny Petitioner repayment of obligations already accrued, it is unconstitutional; (2) the plain language of Section 61 bars reimbursement for claims that Petitioner' was not obligated to submit, and does not impact Respondents' unilateral and nondiscretionary statutory duty to calculate the total reimbursement liability under Social Services Law § 368-a and pay Petitioner for the amounts owed; (3) Respondents' decades-long course of intentionally 01· negligently dilatory conduct pennits this Court to apply Social Service,~ Law § 368-a as it existed at the time that Petitioner incur;ed the Overburden expenses on Respondents' behalf, without consideration of Section 61, under the special facts exception; { 4) Section 61 is not a clarifying amendment, but is a substantive deprivation of Petitioner's vested rights to reimbqrsement for Overburden expenses incurred prior to January 1, 2006 that is being retroactively applied; (5) even if the statutory and· regulatory bases for OverbUJ"den reimbursement had been repealed, Petitioner's vested rights to reimbursement must survive ptll'suant to General Construction Law § 93; (6) Section 61 deprives· Petitioner of due 2 process of law; (7) Respondents' defense based on the doctrine of !aches is baned by collateral estoppel; and (8) Section 61 does not bar Petitioner from recovering for conversion, unjust enrichment, and constructive trust; WHEREAS, the Court having· heard oral argument of counsel for the parties on December 9, 2013; and · . NOW, upon due consideration of all the pleadings and proceedings in this matter and the oral arguments of counsel, it is h.ereby ORDERED, ADJUDGED AND DECREED that, fo1· the reasons set forth in the transcript of the December 9, 2013 proceedings before this Court ("Transcript') (attached hereto as Exhibit A), this Court finds that Petitioner's right to reimbursement under Social Services Law§ 368-a accrued prior to 2006, upon Petitioner's payment to DOH for servloes provided to overburdened patients for which no local share was owing; and it is"further 'oROERED, ADJUDGED AND DECREED that, for the reasons set forth in the Transcript, this Coiui finds that Petitioner's right to reimbursement under Social Services Law § 368-a is a vested right that cannot be extinguished by nrtroactive legislation; and it is further ORDERED, ADJUDGED AND DECREED that, for the reasons set forth in the Transcript, insofar as Section 61 attempts to deny the County repayment of obligations already accrued, it is unconstitutional; and it is further ORDERED, ADJUDGED AND DECREED that the.Verified Petition and Complaint ls granted in part and denied in part; and it is ftuther ORDERED, ADJUDGED AND DECREED that the determination of Respondents, dated September 4, 2013, purporting to deny Petitioner's claims for reimbursement of the overburden expenses that Petitioner incurred on behalf of Respondents prior to January 1, 2006, 3 pursuant to Social Services Law § 368-a, solely on the basis of Section 61, is hereby annulled; and it is further . ORDERED, ADJUDGED AND DECREED that, for the reasons set forth in the Transcript, Respondents are directed to f01thwith allovc Petitioner's claims for reimbwsement and to pay $217,967.75 to Petitioner within 30 days of service with Notice of Entry of this Order and Judgment; and it is further ORDERED, ADJUDGED AND DECREED that the remaining relief requested in the Verified Petition and Complaint is denied, Dated: Mayvllle, New York December[/!)_, 2013 4 SO ORDERED, n. Deborah A. Chimes Justice of the 8.upreme Court ' . ' 1 2 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF CHAUTAUQUA 3 COUNTY OF CHAUTAUQUA, 4 5 6 8 9 Plaintiff Vs. NIRAV R. SHAH, MD MPH, as Commissioner of the New York State Department of . Health, and the NEW YORK STATE DEPARTMENT OF HEALTH, Defendants Article 78 Court's Decision Kl-2013-1266 December 9, 2013 1 10 Chautauqua County Courthouse Mayville, New York 11 12 13 B E F 0. R E: 14 HONORABLE DEBORAH A. CHIMES 15 16 17 18 AP P E AR AN CE S: 19 20 21 22 23 24 25 CHRISTOPHER E. BUCKEY, ESQUIRE Appearing for the Plaintiff DARREN LONGO, ESQUIRE Appearing for. the Defendant GERARD F. LINNECKE Senior Court Reporter 1 2 3 ·4 5 6 Court's Decision 2 MONDAY, DECEMSER 91 2013 CLERK OF COURT: County versus Shah. Counselors, please note your appearances for the Record. MR. BUCKEY: Christopher Bucky from Whiteman, Osterman & Hanna for the County of Chautauqua. MR. LONGO: Darren Longo, Assistant Attorney 7 General, for the respondents/defendants. 8 THE COURT t Alright. You may proceed. 9 (WHEREUPON PROCEEDINGS WERE HAD NOT TRANSCRIBED HERE) 10 THE COURT: Okay, Court's ready to make its l1 12 13 14 15 16 17 18 19 20 decision. The petitioner's motion is granted in part and ·'denied in part. Section 61 attempts to extinguish the petitioner's vested right to reimbursement Of overburden payments under Social Services Law 368(a) retroactively, and therefore is unconstitutional. Petitioner's request for an order compelling respondents' compliance with Social Service Law 368 (a) is granted. l?eti·~ioner' s granted judgment in the amount of $217,967.75 together with statutory interest. Remainder of petitioner's motion is denied. Respondent's cross motion to dismiss 21 is denied. Petitioner is to prepare and submit an order 22 in 30 days, and attach a copy of the transcript to the 23 order. Thank you. 24 (PROCEEDINGS CONCLUDED) 25 1 2 3 CERTIFICATION 5 I 1 Gerard F. Linnecke, Senior Court Reporter, do 6 hereby certify that the foregoing is tlie transcript of 7 Article 78 held December 9, 2013 in the matter of County of 8 Chautauqua Vs. Shah, et al. 9 I further certify that the questions and answers were 10 talcial SeryiC!lS Law § 368-a as i!rbitrary at\d oapricious and/or affected by ~n error of lf Part D of Chapter 56 of!he Laws of2012 unconatituti011a!; dal\lages in the amount of $606,203 .31; imposing a construoti.ve tru.st over the funds respol\dents were obligated to reimburse, llI!d; costs, disbursement• ru.1d attorney fees. 23-e/OV-2013 00: 29 From: CUM CD CLERK '• ~ 6072422448 To:15184877777 ln Bll August 31, 201 I Deoision and Ordodssued by tbis Cou1t, petitioner'sapplication to oompel r"'3pondonts to rl'lmburse fur overburden costs/expenses pursuant ro ~ § 36.8-a was granted. Tb.e Court followed thereason.ing outlined in Matter of County Of St L,awrence v, Daines, lndo~ # CV-2010-0134779 (Sup. Ct. St. Lawrence County, Jun¢ 29, 2011) and Matter of County of Herkimer v. ~' h1dex # 97370 (Sup. Ct. Herkimer Collllty M!!toh 11, ZOl I) in compelling reh.ubul'l'loment. Both the Third Dei,:iartment and Fourth Department hnvo eX]lressly affirmed such detetminations which compelled reimbumemen.t. See, Matter of Q>unty ofl;{\, )'.,awrence v. ~. 81AD.3d212 O"Dept. 20ll); Matter OfCountjlofNlaga!'ll v. ~ 83 A.D.3d 1506 (4"' DeJ?l. 2011); M1!1J:er of County ofNiagara v. ~. 79 A.P.3d 1702 (3'" ))ept. 2010); Matter of County ofHer!cimer v. ~ 60 A.D.3d 1.456 (4'' Dept. 200~); Matter ofCo!Jrtt)! ofNiae;m v, Dairum, 60 A.D,3d 1460 (4'" De,Pt. 2009). See, also Matter of Connl;y of $1, Lawrence v. Shah, 95 A.D.3d l 548 (3"' Dept. 2012), wherein th.; Court stated that respoudents could not retroactively avoid their statutory reimbursement obligation to <>-0unties under Social Services Law S 368-(1. Sectio!l 61 ofl'art D of Chapter 56 of th~ Laws of2012 was pa~s~d by the Legislatur& as part of the 2012 Executive Budget, whtch provided !hat .. notwithstanding the provisions of seot!~n 368,a of the social services law ot-imyother coM'aiyprovMon of law, no reimbUtSemMt shall be made for So¢ial services dislrlct.s' claim• submitted on and after the effective date of this pru:agraph, for district expenditm-<:JS incllffed prior to J$1!\Ulty 1, 2006." Respondents have relied on Section 61 to deny overbui:dO!l reiillbursemen~ whic11 hag spurred recent litlga!lon, idootical to the i;ction at bar, that has resulted in Courts expressly stating that Section 61 does not bar reirnbursemOJlt, See, Matter of CountY of Niagara v, Shah, et al., (Sup. Ct, Niagara Co., Nugent Panepinto, J., Index No. 149492-2013, June 18, 2013); Matter of County of St. 1,awrenoe v, l:i.l!.l!l!, (Sup, Ct., St. Lawrence Co., Demru:est, J., lndex No. 140712, July 31, 2013); M.~ County of St. j:.awrenoo v. Bh!ill, (Sup. Ct., St. Lawrence Co., Demareirt, J., lilcle« No. 140998, July 31, 2013); Matter ofGQunty ofSt. Ll!w:renoo v, Shah, (Sup, Ct., St, Llwt'ence Co., Pemar"'!~ J,, fudexj\fo. 0141656, August:l.013). R<:JSpondents have submitted a verifi'ld answer to the pelliion, along wiih a motion for summary judgment on the decliroitoiyjndgm whfoh pe.rmi~sibly cuts off petitioner's overburd<;n claims retronctlvely. Petitioner has submitted repJypapen;, rt ls clear that the same set of facts and legal analy$1& are present in 'Ibis action as in the recent iwlion• m Matter ofCo\lllcyofNfamm1 v. Shab, el al, (Sup. Ct., Niagara Co., Nugent Pllll.eph1to, J., Index No. 149492~2013, Jll!le 18, 2013); M;;tter ofCQUn!)( of St. Ll\wren@ v. Wyfil, (Sup. Ct., St. LaWtence Co., Demarest, J., Index No. 140712,July 3J, 2013); Matter of. Coumy of St, Lllwrniru; v. filW], (Sup, Ct., St. Lllwrence Co., Demarest, J., ).ndex No. 140998, July 31, 2013); Matter of County of St, L!!wrenAA v. filulh, (Sup. Ct., St Lawrence Co., Oema:rest, J., Ind~x No. 0141656, August20l~), atid the Comt sees no reason to depart . tber<;ofrom. B~ed upon these holdings, and ihe entiro·record before The Court, inoludi1ll'.! but not 23-NDV-2013 00:29 From:CU~I CO CLERK i " 5072422448 To:15184B77777 limJt\Od to the reasons as set forth in pet!tloJ\l)X''s papers, as well as the holding in Matter of County of St. Lawt1'Jlcey. Shah, supra, respondents o:mnotrelyon Section 61 tq deny petitloner'.s claim for overburdoi:t costs. It ls lherefore, ORDER.&D, that respi~ 1\8 ac:adernlc. This ~hall oo!lstltute th<; Decfoion and Oxder of The Court. ENTER Dated: NovemberlJ.20l3. ' Orlglnal; Nancy Kreisler, Acting Chief Clerk Suprem~ & County CoUrl$ I Matter of County of Genesee v Shah Index No. 63493 ..... ------ ··- . -· .. ·-·-·--·--· ------··---·--· . . . ·- --·· -----------. ·-------·-----··--· .. --·-· -·--··-· STATE OF NEW.YORK .SUPREME COURT : COUNTY OF GENESEE In the Matter of COUNTY OF GENESEE, Petitioner-Plaintiff, For a Judgment Pursuant to Article 78 of th,, Civil Practice Law and Rules and a Declaratory Judgment Pursuant to Section 3001 of the Civil Practice Law and Rules, v. NIRAV R. SHAH, M.D., M.P.H., as Commissioner of the New York State Department of Health and THE NEW YORK STATE DEPARTMENT OF HEALTH, Respondents-Defendants. CHRISTOPHER E. BUCKEY, ESQ. Attorney for Petitioner-Plaintiff DARREN LONGO, ESQ. Index No.: 63493 Assistant Attorney General for Respondents-Defendants DECISION AND JUDGMENT ROBERT C. NOONAN, J. The County of Genesee ("petitioner'') has brought the captioned hybrid proceeding to compel respondents to reimburse the county for certain medical assistance expenditures made prior to the year 2006, and for related relief. Respondents-defendants ("respondents") oppose, and request summary judgment on petitioner's plenary claims. The matter came before the April 25, 2014 Spec"lal Term of this Court. Procedurally, given the special proceeding brought by petitioner pursuant to CPLR Article 78, the Court must apply a summary judgment analysis to the pleadings, papers and admissions initially submitted to the Court (CPLR §409[b]; Matter of Trustco Bank v. Strong, 261 AD2d 25, 27; Matter of Empire Mutual Insurance [Greaney], 156 AD2d 154, 156). Since, under those rules, the Court would search the record In any event ( G//heany v. Civil Service Employees Assoclatiori, 59 AD2d 834), a formal notice for cross-motion For summary judgment will not be required either in the special proceeding or the plenary action. However, "(o)nly If no triable Issues of fact .are raised may a court make a summary determination following the hearing" (Slisz v. Beyer, 92 AD3d 1238, 1241). Very basically, the state, county and federal governments have historically shared the expense of providing medical care to Individuals who were Indigent, Including those disabled as a result of mental Illness. The government funded health program is administered by the State Department of Health with funds received from the federal, state and local governments. Counties make payments to the state for their local share of the medical assistance payments. Although the State pays the medical providers, the county has the initial responsibility for the cost of medical providers for such indigent individuals within their local communities. With the movement toward de-institutionalizing many such individuals from state Institutions and into the community, thus shifting such costs from the state to 2 the counties, the state was prevailed upon to assume full responsibility for the medical expenses of those de-Institutionalized individuals (L. 1974, cc. 620 & 621), and then to reimburse the counties for the full amount of medical assistance payments (overburden expenditures) made by the county to the state on behalf of those de-lnstltutlonalized individuals (Social Services Law §368-a[1][h]). "Social Services districts thus Initially paid their full local shares of the State's Medicaid payments to providers. The State subsequently Identified those Medicaid recipients who are mentally disabled under the applicable overburden criteria and, for those that qualify, issued quarterly reimbursement payments to districts" (4/11/14 LoCicero affidavit at iJ18 [italics added]). The state retained the ultimate responsibility to Identify, code and track those de-institutionalized individuals for which the county was entitled to medical assistance reimbursement. As alleged by petitioner, it has since been discovered that for a number of years the state either miscoded or surreptitiously recoded individuals for whom the counties were otherwlse entitled to reimbursement for medical assistance, thus depriving the counties of their full reimbursement (see also 4/23114 Stormer affidavit at 'jj'1)25 - 60). 1 Voluntary disclosure of the pertinent Information has not been forthcoming (Id at 11'1161 - 69). Effective January 1, 2006, the methodology for computing the local share of the medical assistance cost changed with a "Medicaid cap statute" (L. 2005 c, 58, Part C), eliminating the payment-then-reimbursement method utillzed under Social Services Law §368-a(1)(h). However, the Appellate Division of the New York State Supreme Court declared that the new formula was not retroactive and did not impair 3 the counties' right to reimbursement for overburden expenditures accrued prior to January 1, 2006 (see Matier of County of St. Lawrence v. Daines, 81 AD3d 212; Matter of County of Herkimer v. Daines, 60 AD3d 1456). It was subsequently determined that additional legislation (L. 2010, c. 109, Part B, §24), which the state construed to prohibit reimbursement of overburden expenditures beyond the Medicaid cap formula, did not effectively repeal the state's statutory obligation to reimburse the counties for expenses incurred prior to 2006 (Matter of County St. Lawrence v. Shah, 95 AD3d 1548). Further legislation, tucked into the expansive 2012 state budget bill (L. 2012, c. 56, §61), i.e., "Section 61", then specifically barred subsequent claims for reimbursement of pre-2006 overburden expenditures. That budget bill was introduced January 17, 2012, and was signed Into law March 30, effectlveAprlt 1, 2012 (id at §65). Nevertheless, the petitioner County of Genesee filed such a claim with the Department of Health on December 6, 2013, and an amended claim on December 17, 2013, which was rejected on March 17, 2014, based on the 2012 legislation barring such pre-2006 claims·. Petitioner now claims that Section 61 unconstitutionally deprives it of a vested right under §368-a(1 )(h) tofu II reimbursement for the overburden local share payments taken from petitioner. To the contrary, respondents contend that "the Medicaid cap brought* * * needed fiscal rellef to petitioner and all Social Services districts by providing stability, certainty and predictablllty to their Medicaid costs. By complying with 4 Section 61, respondents achieve a similar outcome, one that lends stability and predictability to the State's Medicaid budgeting process by walling off !!ability for district Medicaid expenditures that, if Incurred, were incurred long ago" (Locicero at '!f6), Moreover, the DOH still computes what the overburden reimbursement would have been under§368-a. "If the district would have paid less under the prior methodology, the Department issues a refund. If the district would have paid more under the prior methodology, the Department holds it harmless and It, not the district, is responsible for paying those costs that exceeded the district's cap amount" (LoCicero at 'jf38; Stormer at 'jf21). According to respondents, petitioner itself has realized fiscal savings of more that 5.3 million dollars since the Medicaid cap's inception (LoCicero at 'jf43). Thus, while espousing the "Medicaid cap's unarguable benefits to SooJal Services districts" (LoCicero at 'jf45), respondents do not deny that the DOH "can no longer reimburse Social Services districts for overburden payments formerly authorized by Social Security Law §368"a(1 )(h)" (loCicero at 1]39), including those incurred prior to the Medicaid cap. It was concededly the purpose of Section 61 to '"wall-off' any further potential State llabilityforsuoh overburden reimbursement claims that were submitted on and . after the provision's effective date" (LoCioero at 'jf50). Respondents note that between introduction of the budget blll on January 17, 2012, and its effective date, many Social Services districts submitted additional claims for reimbursement which were ultimately paid in June of 2012 (LoCicero at '1!52). The petitioner, County of Genesee, however did not. 5 Respondents also contend that petitioner had the ability and opportunity to check the accuracy of the coding prior to the effective date of Section 61 (LoCicero at '!l'!f28-30) and could have submittad Its claim for additional reimbursement in a contemporaneous manner (loCicero at 'l]62; 18 NYCRR §635.1). Respondents argue that to permit such reimbursement now would "shackle the Department and State with and unknown and unknowable financial burden for years, even decades, Into the future" (LoCloero at '!!61). Respondents' arguments, as a matter of public policy going forward, are cogent. Nonetheless, it has been universally determined throughout the State, albeit only at nisi prius, that Section 61 constitutes an unconstitutional abridgment ohm accrued right to the reimbursement of overburden expenditures incurred prior to2006 (see MatterofCountyofNiagara v. Shah, Sup Ct, Niagara County, Nugent Panepinto, J., June 18, 2013, Index No. 149492-2013; Matier of County of St. Lawrence v. Sf1ah, Sup Ct, St. Lawrence County, Demarest, J., July 31, 2013, Index No. 140712; Matter of County of St. Lawrence v. Shah, Sup Ct, St. Lawrence County, Demarest, J., July 31, 2013, Index No. 140998; Matter of County of St. Lawrence v. Shah, Sup Ct, St. Lawrence County, Demarest, J., August 30, 2013, Index No. 0141656; Matter of County of Chemung v. Shah, Sup Ct, Chemung County, O'Shea, J., November 19, 2013, Index No. 2013-1849; Matter of Chautauqua County v. Shah, Sup Ct, Chautauqua County, Chimes, J., December 9, 2013, Index No. 2013·1266; Matter of Jefferson County v. Shah, Sup. Ct, Jefferson County, January 15, 2014, Gilbert, J., Index No. 2013-1956}. 6 Given the substantial difference between petitioner's original December 6, 2012 claim, and the amended claim received December 17, 2012, the Court agrees with respondents that the latter date Is the measure of timeliness (18 NYCRR §601.4), and that respondent's rejection of petitioner's claim on March 17, 2014, was therefore timely.' However, given such, respondents may not now supplement their determination to deny petitioner's initial claim on alternative grounds (Matter of County of Niagara v. Daines, 79 AD3d 1702). Nor does the Court accept petitioner's sophistic argument that Section 61 barred only the claims and not the State's obligation for further reimbursement of overburden expenditures. However characterized, It is clear on the face of the legislation and from the Memorandum In Support that It was intended to deny further reimbursement to alleviate that cost to the State. Section 61 does not, on its face, repeal §368-a, and defendants Insist that it does not. However, as advanced by petitioner, even an Implicit repealer would run afoul of §93 of the General Construction Law, prohibiting the repeal of statutorily vested rights (compare County of St. Lawrence v. Shah, supra at 1553 - 1554). In any event, it is axiomatic that "(a)!though a statute is not invalid merely because it reaches back to establish the legal'slghlficance of events occurring before its enactment, a traditional principle applied in determining the constitutionality of such legislation is thatthe Legislature Is notfree to impair vested cir property rights" (Matter of Hodes v. Axelrod, 70 NY2d 364, 369 - 370). 7 Therefore, in view of that principle and the foregoing cases at nisi prius, this Court concurs in the conclusion that Section 61 retroactively impairs petitioner's vested right to reimbursement of overburden expenditures and Is therefore unconstitutional. Assuming arguendo that petitioner could have moved more quickly in identifying and collecting reimbursement for the additional overburden expenditures, there appears no time limit for claims under §368-a{i)(h); and, mere lateness, without undue prejudice as a result of the delay, does not give rise to a defense of \aches (see generally Prem/er Capital v, Best Traders, 88 AD3d 677, 678; Sparkling Waters Lakefront Associalion v. Shaw, 42 AD3d 801, 803). Thus, it remains that respondents have had and continue to have a mandatory obligation under §368-a(i ){h) to reimburse petitioner for overburden expenditures covered by §620 and 621 of the.laws of 197 4, through December 31, 2005. It Is questionable whether this Court has jurisdiction over petitioner's stand- alone cause of action for unjust enrichment (Sarbro IX v. State of New York Office of General Services, 229 AD2d 910; but cf Matier of Gross v. Perales, 72 NY 2d 231); but, in any event, that cause of action is academic. Further, "no authority has been called to [its] attention for imposing a constructive trust against one governmental entity for the benefit of another" (Fa/Iioa v. Town of Brookhaven, 69 AD2d 579, 589); and, given the assets and credit of the state, such relief would appear unnecessary (MatterofYannottiv. D'E/la, 117 AD2d 609, 610). 8 Accordingly, it shall be and hereby is: ORDERED, ADJUDGED AND DECREED, that respondent's objection in point of law number one, thatthe petition-complaint fails to state a cause of action, is denied, ORDERED, ADJUDGED AND DECREED, that respondent's objection in point of law number two, that respondent's March 17, 2014 determination was not arbitrary, capricious and contrary to law, is denied insofar as It was contrary to law. ORDERED, ADJUDGED AND DECREED, that respondent's objection in point of law number three, that Chapter61 bars reimbursement of petitioner's claim, is denied; ORDERED, ADJUDGED AND DECREED, that respondent's objection in point of law number four, that the petition is barred by th~ doctrine of !aches, is denied; ORDERED, ADJUDGED AND DEGREED, that respondent's objection in point of law number five, that respondent's March 17, 2014 denial of petitioner's reimbursement claim was timely, is granted. ORDERED, ADJUDGED AND DECREED, that petitioner's first cause of action, for mandamus based upon respondents' default under 18 NYCRR §601.4 is dismissed on the law. ORDERED, ADJUDGED AND DEGREED, that petitioner's second cause of action is granted to the extent that respondents are hereby directed to comply with the mandatory duty enjoined upon them by law to identify, calculate, and verify the 9 total unreimbursed overburden local share payments made by petitioner prior to January 1, 2006, and to reimburse petitioner for such payments. Further, the Court hereby grants leave for further discovery on the issue (CPLR §408) and, if necessary, will appoint a referee to the extent necessary to supervise the discovery process (CPLR §3104) and determine the final accounting (CPLR §4317[b]; City of Poughkeepsie v. Poughkeepsie Associated Fire Department, 125 AD2d 522), ORDERED, ADJUDGED AND DECREED, that petitioner's third and fourth causes of acition are granted insofar as it Is hereby declared that Section 61 Is In violation of §93 of the General Construction Law and/or unconstitutional and therefore invalid, null and void, ORDERED, ADJUDGED AND DEGREED, that petitioner's fifth cause of action, for violation of various statutes relating to state and local government, is dismissed as academic. ORDERED, ADJUDGED AND DECREED that, based upon the constitutional violation, petitioner's sixth cause of action is granted to the .extent of partial summary judgment against respondents in the amount of $313,134, plus statutory Interest. ORDERED, ADJUD~ED AND DEGREED, that petitioner's seventh cause ·of action for unjust enrichment is dismissed as academic. ORDERED, ADJUDGED AND DECREED, that petitioner's eighth cause of action, for a constructive trust, is dismissed on the law. 10 Proceed accordingly. The foregoing constitutes the Decision and Judgment of the Court. Dated: May /~ , 2014 Batavia, New York HON. ROBERT G. NOONAN Acting Supreme Court Justice 1. The failure to credit petitioner with the full amount of overburden reimbursement to which it was entitled may also adversely Impact petitioner's obligation under the "Medicaid cap" going forward by altering the baseline (Stormer at '1176). 2. Although petitioner argues that "respondents ha\/e offered no authority for the proposition that they can restart an unequivocal deadline simply because there was an alleged non-substantive change to the underlying claim" (4/23/14 Buckey affidavit at 8, fn1), this Court would not find the $27, 103 change "non-substantive", and petitioner has Itself offered no authority for the proposition that it can impose a prior deadline after such an amendment of its claim. Therefore, in the spirit of fairness in which this proceeding has been brought, the Court will not deny respondents the full benefit of the 90-day determination . . , 11 Matter of County of Jefferson v Shah Index No. 2013-1956 Nancy Rose Stormer, PC 315-735-9392 p.2 .~ At a Term of Supreme Court held in and for the County of Jefferson, in the City of Watertown, New York on the 14tn day of November, 2013. PRESENT: HONORABLE HUGH A GILBERT Supreme Court Justice STATE OF NEW YORK SUPREME COURT COUNTY OF JEFFERSON In the Matter of ,,. COUNTY OF JE'.FFERSON, Petitioner-Plaintiff, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules and a Declaratory .Judgment Pursuant to Section 3001 of the Civil Practice Law and Rules -against- NIRAV R. SHAH, M.D., M.P.H., as Commissioner of the New York State Department of Health and THE NEW YORK STATE DEPARTMENT OF HEALTH, Respondents-Defendants. DECISION lndex No. 2013-1956 RJI No. 22-13-0863 The Petitioner, County of Jefferson ("County"), seeks to annul the determination of Respondents, Commissioner of the New York State Department of Health and the New York State Department of Health, or DOH, dated September 4, Nancy Rose Stormer, PC 315-735-9392 p.3 -~. 2013, which denied Petitioner's claim for reimbursement of overburden expenses that Petitioner incurred on behalf of Respondents prior to January 1, 2006. It seeks judgment pursuant to Article 78 of the CPLR which provides an expeditious and · essentially uniform procedure for judicial review of challenges to actions, or Inaction, by agencies and officers of state and local government. The Iaw is well- settled that a court may not disturb an administrative decision unless the agency's action was arbitrary and capricious, in violation of lawful procedures or made in excess of its jurisdiction. Matter of Schatz v. Department of Consumer Affairs of ,. the City of New York, 177 AD 2d 324, 326 (1991). Petitioner believes that the partie;s have. a close relationship arising from their joint administration of the New York State Medical Assistance Program, New York's counterpart to the Federal Medicaid program. The Program was estabHshed to ensure that certain medical assistance recipients receive the medical care that they need. Petitioner urges that Respondents have an array of fiduciary obligations, including full disclosure, fair dealing, the providing of instruction and training on all aspects of medical assistance laws, regulations, practices, and procedures. Even accepting this premise to be accurate, a significant issue arose concerning the obligation of the DOH to reimburse Petitioner and other counties for a categ~ry of Medicaid-type expenditures prior to a certain date. This issue appeared to have been resolved in the favor of the counties during a series of 2 Nancy Rose Stormer, PC 315-735-9392 p.4 .. ~. judicial decisions but then emerged when the Legislature enacted what will be referred to as Section 61 of the 2012-2013 budget bill submitted by the Governor of the State of New York. Section 61 is geared to reverse the judiciaf determinations requiring the payment of pre-2006 overburden payments by the counties, with an April 1, 2012 deadline established for the submission of claims. In this regard the Petitioner directs the Court's attention to Social Services Law §368-aentitled "State Reimbursements•'. Petitioner contends ,, that this statute imposes a mandatory obligation to reimburse it for expenses it incurred in relation to the treatment of mentally disabled recipients. This reimbursement is labe.led "overburden expenses." Apparently on June 12, 2013, Petitioner submitted c!aims for reimbursement of overburden expenses to the Respondents in the amount of $114,501.50. These claims were rejected in September 201q because they related to overburden expenses that were incurred prior to January 1, 2006. Petitioner contends that Respondents are mandated to pay these claims. The Respondents not only contest the contentions raised by the Petitioner but moved for summary judgment to dismiss the claims set forth in the Verified Petition and Complaint. The. Respondents perceive the proceeding commenced by Petitioner to be a hybrid mechanism challenging the ruHng of the 3 Nancy Rose Stormer, PC . 315-735-9392 p.5 DOH as to the unconstitutionality of Section 61, a declaratory judgment, a11 arbitrary and capricious determination, subject to mandamus to compel, and in· violation of certain State law contract and tort provisions. Petitioner believes that it, like other counties throughout New York State, is responsible pursuant to the Medical Assistance Program for providing medical assistance payments to eligible patients. Petitioner further believes that the Legislature had eliminated a former obligation of each county to pay its fifty percent of the Medical Assistance costs. The Legislature enacted what Petitioner describes as "hold harmless" provisions requiring Respondents to reimburse each county for the costs incurred for assistance to certain indigent, mentally disabled persons. Petitioner directs the attention of the Court to Social Services Law §368-a(1)(h) which it interprets as providing counties with full reimbursement for their "overburden expenses". Petitioner contends Section 61 of the Budget Bill could not nulllfy the statutory provision that the county is obligated to pay these overburden expenses in the first instances, jointly administer ihe medical assistance program with Respondents, then Respondents reimburse each· county for its payments of these overburden expenses. The Respondents explain that, with regard to fee-for-service Medicaid, medical providers submit claims for payment to the fiscal agent of the 4 Nancy Rose Stormer, PC 315-735-9392 p.6 .·~ ........... Social Services district after the service is provided. The district processes and pays valid claims for payment. In funding medical expenditures the Federal Government contributes approximately fifty (50%) percent as its Federal Medical Assistance percentage, or "FMAP". Prior to January 2006, Social Services districts, with certain exceptions, paid approximately fifty (50%) percent of the non-Federal share, or twenty-five (25%) percent of the total Medicaid expenditures, its "local share". In this regard, nevertheless, Social Services districts were to be fully reimbursed for certain expenditures prior to January 1, 2006, for local shares they "'· initially paid for services provided to certain mentally disabled recipients who met a criterion for so-called "overburden requirements." Respondents erroneously believed that subsequent "CAP" legislation in the year 2010 cut off the opportunity of counties to seek such pre-2006 reimbursement and believe that Section 61 definitively does that since April 1, 2012, Petitioner recalls the so-called cap methodology adopted in 2005 which was to use 2005 as a base year for a county's total health care expenditures for county-charged incidents and' then guarantee that future expenditures did not increase unreasonably. The Petitioner urges that the Medicaid cap statute of 2005 altered the prior funding formula by, in effect, limiting each county's liability to the net Medical Assistance expenditures it made in 2005, with adjustments for inflation and other so-called trend fac:tors. The Petitioner further interprets the 2005 5 r Nancy Rose Stormer, PC 315-735-9392 p.7 Medicaid cap statute as incorporating the pre-existing hold harmless provisions prospectively while leaving them unchanged retrospectively, with .a legislative intent of providing counties with relief from the financial burdens imposed upon them by Medicaid. The effective date of this statute is reported to be January 1, 2006, but Petitioner did not consider that legislation to have any negative impact on State Hability for services provided prior to January 1, 2006. The State of New York disagrees. The Respondents believe that as of January 1, 2006, the Medicaid cap brought needed fiscal reHefto Petitioner and all Social Services districts by providing stability, certainty and predictability to their Medicaid costs. The Respondents assert that prior thereto Social Services districts initially paid their full local shares of the State's Medicaid payments to medical providers. The State then identified those Medicaid recipients who were mentally disabled under the applicable overburden crite.ria and, for those who qualified, issued quarterly reimbursement payments to Social Services districts. However, the DOH interpreted this cap statute as serving as a fixed ceiling for the counties' Medicaid obligations to the extent that this statute barred the subsequent submission of any claims for overburden expenses incurred prior to the cap statute. The DOH believed that no pre-January 1, 2006 liabilities had to be paid to the counties after January 1, 2006. 6 Nancy Rose Stormer, PC 315-73 5-9392 p.8 .. --.. The Petitioner interprets the Medicaid cap statute of 2005 as continuing Respondents' responsibility to reimburse the counties for One Hundred (100%) percent of the counties' local share of Medical Assistance expenses paid prior to January 1, 2006 on behalf of overburden-qualifying disabled persons. Respondents believe that effective January 1, 2006 Social Services districts remain responsible for paying their !ocal shares of Medicaid expenditures but the amount of each district's local share is fixed or capped pursuant to the Medicaid cap statute of 2005. This special proceeding/hybrid lawsuit concentrates on the limited Medicaid program invoMng these overburden expenses. Respondents contend that the Department of Healt)l can no longer reimburse Social Services districts for overburden expenses formerly authorized by §368-a(1 )(h) of the Social Services Law. While a district's local share of total Medicaid expenditures-its Medicaid cap amount-could increase from one state fiscal year to the next, it would only do so in accordance with the fixed and. modest percentage rate increase that the Medicaid cap statute of 2005 supposedly prescribed. The Petitioner asserts that in April 2005 the Respondents qrdered the Office of Temporary and Disability Assistance to suspend any processing of all overburden reimbursements to the counties, even those Incurred prior to the 7 :r: Nanoy Rose Stormer, PC 315-735-9392 p,9 .. .--.,. January 1, 2006 effective date of the Medicaid cap statute. The DOH consistently argues that any such activity, or inactivity, was in accordance with the language and spirit of the Medicaid cap statute. The Petitioner, and other counties, successfulfy challenged this argument in the judicial system. As a consequ~nce, the subject Section 61 of the 2012 Budget Bill became a vehicle by which DOH seeks to enforce its argument through a purported override of the express language of Section 368-a(1)(h)(i) enacted ba,ck in 2005 as part of the Medicaid cap statute. The Respondents surmise that despite what they categorize as the Medicaid cap's unarguable benefits to Social _Service districts, some longed for certain aspects of the pre-cap world, such as the routine receipt of overburden expenses made pursuant to §368-a(1 )(h)(i). It is important ta note early an that it was the obligation of DOH to review the County's quarterly requests and pull out the cases qualifying for overburden expenses. The County audited itself and discovered instances of reimbursement which DOH neglected to identify prior to the effeciiv<;> date of the Medicaid cap. Petitioner in June of 2013 did not submit new "claims" for·servlces rendered but pointed out to DOH specific services rendered ·prior to January 1, 2006, far which it had.not yet been reimbursed. DOH hoped that the amendment of the Medicaid cap statute would 8 :>: Nancy Rose Stormer, PC 315-735-9392 p, 10 .~ resolve the disagreement between the parties. This 2010 amendment provides that "the State/Local Social Services district relative percentages of the non-Federal share of Medical Assistance expenditures incurred prior to January 1, 2006 shall not be subject to adjustment on or after July 1, 2006." The Petitioner believes that relying upon this language of this 201 O amendment the Respondents began to claim that any reimbursement to a county for its overburden expenses would alter that county's "percentage of the non-Federal share" for Medical Assistance expenditures made prior to January 1, 2006, in violation of the 2010 amendment. DOH had statutory language in the 2010 amendment which it assumed ended any discussion about services prior to the enactment of the Medicaid cap statute. Enter the Courts. The Petitioner submits that there are judicial precedents rejecting the interpretation of the Respondents concerning the impact of the Medicaid cap statute claims for services rendered prior to January 1, 2006. The Courts appear to have applied the doctrine that, under New York law, retroactive application is not favored. by Courts and statutes will not be given such construction unless the language expressly or by necessary. implication requires it. Matter of The County of St. Lawrence v. Daines, 81 AD 3d 212, 214 (2011). The Fourth Judicial Department concluded that the DOH improperly applied the Medicaid cap statute retroactively to claims by a county for reimbursement for services rendered prior to the effective date ofthe statute, Matter of County of Herkimer v. Daines, 60 AD 3d 1456, 1457 9 Nancy Rose Stormer, PC 315-735-9392 p, 11 (2009). As noted, the Petitioner refers to a number of judicial decisions which it believes flatly reject Responde.nts' position that the Medicaid cap. statute had some effect on the entitlement of a county to such reimbursement and the Medicaid cap statute could not retroacf1vely deprive the counties· of their statutory entitlement to reimbursement for overburden expenses. The gist of these judicial decisions is that these' courts saw, in reviewing the plain language of the 2010 amendment to Social Services Law § 368-a, that there is no reference to overburden and/or reimbursement or language that otherwise expressly or impliedly infers that the Medicaid cap legislation can be retroactively applied lo defeat the statutory right of a county to payment. The Courts held that §368-a remains in full force and effect after passage of the 2010 amendment. The DOH then oversaw the drafting of language for inclusion in the Governor's budget proposal for State fiscal year 2012-2013 which DOH thought would clarify the intent of the Medicaid cap statute. In other words, if the Courts did not perceive the 2010 amendment as shutting off pre-2006 county seNfces reimbursement, this language of the budget bill would do so expressly. Within this separate and distinct budget bill the drafters sought to insert favorable language replacing Social Services Law §368-a(1 )(h)(i) without 10 Nancy Rose Stormer, PC 315-735-9392 p.12 actually replacing the language of the original Medicaid cap legislat[on. Without · changing the Social Services Law there was included in the budget as Section 61 of Part D of Chapter 56 of the Laws of 2012: "Notwithstanding the provisions of Section 368-a of the Social Services Law or any other contrary provision of law, no reimbursement shall be made for Social Services districts' claims submitted on and after the effective date of this paragraph, for district expenditures incurred prior to January 1, 2006, including, but not limited to, expenditures for services provided to individuals who were eligible for medical assistance pursuant to section three hundred sixty-six of the Social Services Law as a result of a mental disability, fonnerly referred to as human services overburden aid to counties. L. 2005, ch. 58, pt. C. Section 1, subdivision (h), as added by L. 2012, ch, 56, pt. D, Section 61." The sensitivity .that this Section 61 engenders is observable in Petitioner's characterization of it as a retroactive rewrite of the 2005 Medicaid cap to attempt to extinguish vested rights. Petitioner views a dark side to the story of the fiscal relationship between the State and New York's counties involving (a) fiscal wrongdoing or plain incompetence by DOH, (b) a subsequent attempted cover-up or refusal to review recent transactions by DOH, and (c)°the attempt, 1n the 2012 executive budget, to finally, as is flatly admitted by Respondents, "wall off' liabilities owed to counties, The Respondents propose that the purpose of Section 61 was to 11 "' Nancy Rose Stormer, PC 315-735-9392 p.13 address the litigation that Social Services districts had commenced to obtain overburden reimbursement for pre-cap years, This Section 61 certainly reflects, and expressly enunciates, the position taken by DOH since January 1, 2006. However; can DOH enforce a position which has been rejected by the judicial system? The Petitioner expresses its view that Section 61 of the 20.12 Executive Budget Law, as enacted, cannot accomplish the objective of this newly- minted immunity claim without repudiating vested debts. Petitioner emphasizes that the constitutional, statutory and common law mandates of New York law do not permit the repudiation of debt. Petitioner charges Respondents with owing debt which it has made no effort to calculate or pay and which "walling off' is not a recognized method of extinguishment. In other words, can a person, even the state of New York, unilaterally declare that he or she no longer desires to pay an existing. debt and further declare that such debt is discharged? Respondents contend that Section 61 lends stability and predictability to the State's budgeting process by walling off liability for Medicaid expenditures that, if incurred, were incurred a long time ago. Respondents consider that by asserting Section 61 as a defense to payment they are merely seeking finality and the cessation of an open-ended, unknown and unknowable future financial liabllity. They suggest that Petitioner has had ample opportunity both to ascertain whether it 12 Nancy Rose Stormer, PC 315-735-9392 p.14 .-. had inadvertentry not received reimbursement for services provided to overburden eligible recipients prior to January 1, 2006, and to submit reimbursement claims by the deadline of April 1, 2012, Respondents urge that the fact that Section 368-a remains on the books is immaterial to the current reimbursement claim of Petitioner. However laudable it is for the State to seek to establfsh a plan for economic stability, can this be accomplished by unilaterally writing off previously existing legltimate economic obligations, cancelling out the past to make April 1, 2012 the first day of State economic respo_nsibility? This does not appear reasonable or appropriate. The Court must further. respectfully disagree with Respondents that the fact that Section 368-a remains on the books is immaterial. This so-called clarification was not enacted as an amendment to Section 368-a. Instead it was tucked away within the confines of the budget bill. Notwithstanding the attemp1 to modify the langualle of an existing statute, the l.:1nguage of Section 368-a(1)(h)(i) reads: "Beginning January first, nineteen hundred eighty-four, one hundred per centum of the amount expended for medicaf assistance for those individuals who are eligible pursuant to section three hundred sixty-six of this article as a result of a mental disability as determined by the commissioner in consultation with the commissioner of the office of mental health and the commissioner of the office of mental retardation and developmental disabilities and with the approval of the director of the budget after first deducting therefrom any federal funds properly received or to be received on account thereof." 13 )> Nancy Rose Stormer, PC 315-735-9392 p.15 ··---- ·~ Section 61 was not incorporated into a proposed amendment of Social Services Law §368-a, voted out of the appropriate commEttees of the Senate and Assembly, placed upon the desk of members of the Assembly and Senators, and voted upon as an amendment. Instead it was tucked into the budget b[li as one of its multip!e sections. This was not sufficient to effectively amend §368-a. Consequently, as previously noted, the June 13, 2013 claims for overburden expenses and the September 2013 rejection thereof by the Respondents are the crux of the Petition. Petitioner further urges that the subject Section 61 must also be read along with General Construction Law §93 which provii:les: "The repeal of a statute or part thereof shall not affect or impair any act done, offense committed or right accruing, accrued or acquired, or liability, penalty, forfeiture or punishment incurred prior to the time such repeal takes effect, but the same may be enjoyed, asserted, enforced, prosecuted or inflicted, as fully.and to the same extent as if such repeal had not been effected." Dating back to 1909 this provision establishes the principle that an accrued right under a statute continues beyond the repeal of that particular statute. Matter of Lavine/la, 166 AD 460, 463-464 (1915). In the first cause of action, Petitioner seeks an order and judgment 14 Nancy Rose Stormer, PC 315-735-9392 p, 16 .~. pursuant. to CPLR 7803(1) compelling and directing Respondents to comply with the mandatory duty enjoined upon them to reimburse Petitioner for the overburden expenses that Petitioner Incurred prior to January 1, 2006. The extraor.dinary remedy of mandamus will look only to compel the performance of a ministerial act, and only when there exists ·a clear legal right to the relief sought. Matter of Myron v. Nelson, 259 AD 2d 549 (1999). Prior to April 1, 2012 the Courts had declared that the payment of these overburden expenses back to the counties was a ministerial act Has Section 61 changed this reality as Respondents contend it has? This Court respectfully does not believe that it does. With regard to relief in the nature of mandamus to compel the payment of claims, Respondents point out the language of Section 61 requiring them not to pay these claims. Respondents assert that at the time of denial Section 61 was, and is, good, viable, and constitutional and that payment should not be made. Respondents acknowledge that all previous defenses they raised regarding · this reimbursement issue were· rejected by the Courts so that Article 61 is a fresh attempt to prevail. In other words, if there was no Section 61 preventing reimbursement, there would be a judicial mandate to reimburse. The Court has previously referred in detail to the conflicting interpretations of the parties with regard to Section 61. The Petitioner is hopeful that 15 :r Nancy Rose Stormer, PC 315-735-9392 p.17 ,----.. this Court will adopt the line of thought of the Supreme Court in Niagara County v. Shaw, which accepted the reasoning of the Court of Niagara, and rejected the defenses asserted by Respondents based upon Section 61. It treatecl the Petitioner's claim for mandamus under Social Services Law Section 368-a as it extsted at the time that the County incurred the overburden expenses, annulled the reimbursement denials by Respondents, and directed Respondents to pay the claims. Consequently, the County of Jefferson stresses that §368-a expressly granted reimbursement at the time this county made the Medical Assistance "" · payments resulting in a clear right to receive reimbursement. The Court concurs with Petitioner that Respondents have a mandatory duty to reimburse the expenses. Petitioner also contends that it had no obligation to submit claims for overburden expenses since it was Respondents' statutory obligation to calculate the total reimbursement liability in accordance with §368-a. Petitioner thereby concludes that Section 61 does not alter Respondents' underlying obligation to calculate the total reimbursement liability and pay what is owed. In essence, Petitioner is trying to explain that it never has been, nor is, a responsibility of a county to submit claims. The State is supposed to have a computer system with codes to identify these overburden payments when received soon after the County. has made payment. Petitioner is merely asserting that the right to reimbursement accrued when the County made payment prior to January 1, 2006, and the County currently is looking 16 Nancy Rose Stormer, PC 315-735-9392 p.18 for recoupment of what the County determined, through an audit, that the State should have paid. The Petitioner has overburden expenses which the State should have paid prior to January 1, 2006 but were overlooked or not appropriately identified. This view of the Petitioner appears accurate. In the second cause of action, Petitioner seeks a declaration that Section 61 is unconstitutional, invalid, null and void. CPLR §3001 provides that a Court may render a declaratory judgment having the effect of a final judgment as to the rights and other legal rel?tions of the parties to a justifiable controversy whether or not further relief is or could be claimed. A judicial declaration of the rights of the parties is sought for the purpose of guiding their future conduct. Lynch v. Bailey, 279 AD 650 (1951, affd 304 NY 669 (1952). The Petitioner asserts that Section 61, deprives it of a vested rig ht to reimbursement for these overburden expenses without due process in violation of Article I, Section 6 of the New York Constitution. Petitioner asserts that Section 61 provides Petitioner with no grace period or any opportunity to collect unpaid expenses before purportedly permanently depriving Petitioner of its vested right to reimbursement. The Court agrees with the Petitioner. The third cause of action also asserts that Petitioner is entitled to a 17 Nancy Rose Stormer, PC 315-735-9392 p.19 declaration that Section 61 is unconstitutional, invalid, null and void. Petitioner reasserts that it is entitled to due process of law under Article I, Section 6 of the New York State Consfrtution in that no person shall be deprived of life, liberty or property without due process of law. Petitioner believes that it has a constitutionally protected and statutorlly guaranteed vested right to reimbursement. Petitioner further asserts that DO H's retroactive application of Section 61 to deny Petitioner's claims for reimbursement of overburden expenses that Petitioner incurred on behalf of DOH prior to January 1, 2006 was wholly without legal justification. The Court agrees with the Petitioner. · The fourth cause of action also seeks a declaration that Section 61 is unconstitutional, invalid, and void. Petitioner urges thai it has a constitutionally protected and statutorily guaranteed vested right to the requested reimbursement. Petitioner sets forth that Respondents corrected from Petitioner payments for the expenses for treatment of overburden-qualified patients so as to have a proprietary interest in the funds so collected. Petitioner continues that these funds were raised by real property and sales taxes which became the property of Petitioner since they were obtained without any legal basis by Respondents and in contravention of State constitutional and statutory provisions which guarantee Petitioner's vested rights. Petitioner further cites Section 11 (4) of the New York Statute of Local Government for a rule that the State is prohibited from enacting a Jaw that repeals, diminishes, 18 Nancy Rose Stormer, PC 315-735-9392 p.20 impairs or suspends a right or power relating to the property of local government. Petitioner also cites Article IX, Section 2(b)(1) of the New York Constitution and Section 2 of the Statute of Local Governments to support the theory that Petitioner's proprietary interest in the funds collected by Respondent.s could not be repealed, diminished, impaired or suspended during only one legislative session. Respondents contend that such Sections 2 and 11(4), alcing with Article 1X, Section 2 (b)(1)), are not germane to the constitutionality of Section 61 since they only apply to the State legislature when dealing with the property, affairs or government not of State concern but only purely local concern. Wombat Realty Corp. v. State of New York, 41 NY 20 490, 491. (1977). Floyd v. New York State Urban Development Corporation, 33 NY 2d 1, 6-7 (1973). They contend that a strorig presumption of constitutionality attaches lo legislative enactments. Matter of Wolpoff v. Cuomo, 80 NY 2d 70, 78 (1992). Seventy years ago, the Court of Appeals proclaimed "that a statute can be declared unconstitutional only when it can be shown beyond reasonable doubt that it conflicts with the fundamental law, and that. until every reasonable mode of reconciliation of the statute with the constitution has been resorted to, and reconciliation has been found impossible, the statute will be upheld." Matter of Fay, 291 NY 198, 207 (1943). Respondent believes that the chief argument of Petitioner is that 19 Nancy Rose Stormer, PC 315-735-9392 p.21 .~. . ·- Section 61 impairs its vested right to reimbursement of pre-cap overburden claims. rt further believes that such a claim is founded on the false premise that Article 61 confers some new authority on DOH that was not previously contemplated or permitted under the existing cap law. Respondents refer to·the opening words "to clarify' in Article 61 and to its legislation which is a clarifying amendment to provide an explanation of the rights and obligations already codified under the Medicaid cap statute. Respondents urge that the Petitioner has not satisfied its heavy burden of proving unconstitutionality, and that this amendment was intended to clarify what DOH was already authorized to cfo. Held v. State of New York Workers Compensation Board, 85 AD 3cf 35, 41 (2011). Respondents find the law the law clear that this amendment was merely a Clarification and did not create a new right or affect a pre-existing right. Matter of Marino S., 293 AD 2d 223, 228 (2002). They contend that the cap statute required clarification In light of adverse court decisions which mandate.State payment of pre-cap overburden expenses. It is clear to them that the Legislature enacted Section 61 in an attempt to once and for all clarify or remediate the cap statute so that it unambiguously captures the original intent prohibiting post-cap reimbursemef!t for pre-cap overburden expenses. This so-called clarification, nevertheless, was to remedy the judicial rejection of what was submitted by DOH to be the intended state of law. This Court must respectfully disagree with 20 :r Nancy Rose Stormer, PC 315-735-9392 p.22 .··-. Respondents. We find that Soclal Security law §368-a gave Petitioner an immediate property interest in the income attributable to the reimbursements. If Petitioner's rights to reimbursement vested as soon as the medical payments were made to DOH, Petitioner insists that it had a vested property right to reimbursement which the Legislature lacked authority to abolish. This Court concurs with this logic and reasoning. Highlighting Section 61 in actuality as a clarifying amendment, Respondents propose that the Court must apply a rational basis test in analyzing this legislation for constitutionality. Respondents consider that standard of review an example or pattern of judicial restraint. Port Jefferson Health Care Facility v. Wing, 94 NY 2d 284, 290 (1999). On a rational basis review a statute will be upheld unless the disparate treatment is so unrelated to the achievement of any combination of legitimate purposes that it is irrational. Affronti v. Crosson, 95 NY 2d 713, 719 (2001). Respondents herald Section 61 as rational ln that it provides the State with critical economic certainty in its administration of the Medicaid program, promoting the State'.s important interest in closing its books on undisclosed old liabilities. However, this argument overlooks the reality that it was DO H's computer system which failed to identify the overburden expenses prior to January 21 Nancy Rose Stormer, PC 315-735-9392 p.23 1, 2(}06. There appears to be a consensus that where legislation has retroactive effects, judicial review does not end with the inquiry generally applicable to economic regulation as to whether the legislation has a rational basis. Instead, the courts must balance a number of factors, including _fairness to the parties, reliance of pre-existing law, the extent of retroactivity and the nature of the public interest to be served by the Jaw in order to accomplish a determination whether the rights affected are subject to alteration by the legislature. Alliance of American Insurers v. Chu, 77 NY 2d 573, 586 (1991). The Court does not concur that this . . . consensus is applicable to the manner by which Section 61 came into being or its devastating impact upon vested rights. Nevertheless, the Court shall evaluate these points. Maintaining a comprehensive legal approach, the Respondents continue that even if considered to be a retroactive amendment Section 61 must be deemed constitutional under a balancing test. The State's power to alter the rights and obligations that attach to completed transactions is not as broad as its power to regulate future transactions. Alliance of American Insurers v. Chu, 77 NY 2d 573, 585 (1991). Nevertheless, for a significant period of years there has been evolving more candid considerations of existing vested rights as well as a less inflexible view 22 "' Nancy Rose Stormer, PC 315-735-9392 p.24 of the right of the legislature to pass retroactive legislation. Matter of Chrysler Properties, Inc. v. Morris, 23 NY 2d 515, 518-19 (1969). Consequently, while there is a persisting aversion to retroactive legislation generally, New York has noted that modem cases reflect a less rigid view of the legislature's right to pass such legislatipn and more candid consideration-on a case-by-case basis-of the various policy considerations upon which the constitutionality of retroactive legislation depends. Matter of Hodes v. Axelrod, -70 NY 2d 364, 371 (1987). · The Respondents respectfully submit additional factors which they interpret as affirmatively weigliing in their favor. Section 61 by its plain language does address overburden expenses and the State's obligation to pay them. These additional factors do not shift the balance in their favor. Even applying a balance test the result is not favorable to the Respondents. A positive aspect for a balancing offactors espoused by Respondents is its fairness to all parties. Respondents have outlined the need for stability and also refer to the prospect of counties double dipping into Medicaid funds while the State taxpayers pay the counties twice for overburden expenses in the nature of a credit for the 2005 base year and then again on the reimbursement issue. The benefits to the counties include a benefit of paying the lesser amount under the cap than they owe under the cap calculation or what a county would have owed under 23 Nancy Rose Stormer, PC 315-735-9392 p.25 ~. the old calculations; overburden expenses were already reduced from each county's 2005 base year so as to redl!ce the county's Medicaid cap amount, its local share; the cap statute of 2005 protects the counties from overpayment in the event that additional Federal monies become available to the State; the county's own fiscal certainty from year to year; indemnification by the State in the event the Federal government were to disallow Federal financial participation for Medicaid. Respondents calculate that this Petitioner has saved moFe than $4.4 million due to the advent of the cap between fiscal years from 2005-2006 through 2011-2012. The affidavits supplied by Petitioner outline a long history of questionable behavior, or lack of behavior, by the State. Petitioner refers to a history of the dark side of the State in the program in question. Furthermore, the Respondents are not actually highlighting the fairness of Section 61 but the fairness of the cap created back in 2005. Accordingly, Respondents consider that any claim by Petitioner that ~ relied upon the preexisting law to its detriment must be discounted by the fact that its reliance was based upon a misrnterpretation of the law, underwhich it enjoyed a windfall. Petitioner is believed to have enjoyed more than thirteen million dollars in benefits from the cap, plus credit of almost $2.8 million for overburden reimbursement in its 2005 base year, whHe simultaneously receiving nearly seven 24 Nancy Rose Stormer, PC 315-735-9392 p.26 .-~ hundred fifty thousand ($750,000.00) dollars in pre-cap overburden reimbursements. The Courts have ruled, however, that there was no such misunderstanding, or windfall. Section 61 was an attempt to establish the defenses to reimbursement rejected qy the courts and deny Petitioner any judlclal review of Respondents' denial of reimbursement. Regarding the extent of retroactivlty, the Respondents consider Petitioner ta have been on notice of Respondents' interpretation of the cap statute as prohibiting overburden reimbursements since approximately 2009, when DOH first rejected its claims and asserted the cap as a defense. Respondents further contend that Petitioner should have submitted its clafms for reimbursement a long time ago using the reports and data that DOH made available to Petitioner and other districts regarding overburden expenses. In other words, Petitioner had ample notice to submits its pre-cap overburden claims by April 2012 or forfeit reimbursement. Respondents submit that these factors mitigate against a finding of retroactivity and tip the balance further in favor of Respondents. The Petitioner has certainly been aware for a period of time about Respondents' legal defenses but these defenses had appeared prior to April 1, 2012 to be unsupportive or realistic. As to the issue of timely filing, we concur with Petitioner that it could not file until it determined that an original entitlement was 25 Nancy Rose Stormer, PC 315-735-9392 p.27 overlooked or disregarded. The Respondents acknowledge that on balance the public interest to be served by Section 61 tips decidedly in favor of Respondents and the State taxpayer. Respondents refer our attention back to the litany of benefits for Social Services districts listed in its supporting affidavits and closing papers. Respondents then predict a dl')vastating effect upon the State's administration of the Medicaid program if Section 61 is not upheld and implemented. Again these benefits stef!l back to the 2005 cap.statute rather than to Section 61 which came into existence April 1, 2012. The balance of public interest is that counties be paid what'they are owed. Respondents do not view any violation of due process rights in either the enactment or implementation of Section 61. Respondents consider a retroactive statute that is. clarifying in nature to satisfy constitutional due process concerns where, as here, it shows that the retroactive application of the legislation is itself justified· by a rational legislative purpose. Respondents also repeat that there was notice and a full opportunity over the years to submit its antiquated overburde11 claims." bordering on laches. Again, the Court respectfully disagrees with the Respondents. 26 Nancy Rose Stormer, PC 315-735-9392 p.28 The fifth cause of action calls for an order and judgment awarding Petitioner the sum of $114,501.50, plus statutory interest. In this regard Petitioner charges that Respondents are currently unlawfully retaining Petitioner's property and/or improperly interfering with Petitioner's right to reimbursement. Petitioner asserts that Respondents have refused to reimburse Petitioner for these overburden expenses. In this regard, the Petitioner outlines. the act of conversion as the unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner's rights. Thyroff v. Nationwide Mutual Insurance Company, 8 NY 3d 283, 288-89 (2007). As referenced above, the thrust of this cause of action is that instead of returning the reimbursement funds to Petitioner, as required, the Respondents have improperly retained the funds for their own benefit. Petitioner believes that it has a possessory right or interest in the funds and Respondents' dominion over these funds or interference with these funds is in derogation of Petitioner's rights. Colavito v. New Yqrk Organ Donor Network, Inc., 8 NY 3d 43, 50 (2006). The Court finds this cause of action to be innovative but does not believe that it can be applied against the State of New York or a State agency. A sixth cause of action seeks a judgment for that $114,501.50, plus statutory interest, as wrongly retained funds to which Petitioner is entitled under Social Services Law §368-a(1)(h)(I). The Petitioner believes that by withholding 27 . Nancy Rose Stormer, PC 315-735-9392 p.29 -~. payment, the Respondents have been unjustly enriched. Petitioner asserts that permitting Respondents to retain .the Petftioners reimbursements plai'nly would be against equity and good conscience because that would permit the State to abrogate its undisputed debts to Petitioner unilaterally, without any legal justification whatsoever. The Petitioner believes that Respondents received moneys belonging to Petitioner, that Respondents benefitted from the receipt of such moneys and that Respondents should not in good conscience be permitted to retain such moneys. Matter of Witbeck, 245 Ad 2d 848, 850 (1997). Petitioner considers that Respondents have been unjustly enriched at the expense of Petitioner and is required to make restitution to the Petitioner. Blue Cross of Central New York v. Wheeler, 93 AD2d 995, 996 (1983). The Respondents perceive no unjust enrichment. AEJain, Respondents assert that the Petitioner has ignored the existence of Section 61, and recite the benefits which Respondents perceive to have flowed lo Petitioner as a result of the cap. The Respondents do not understand how they are enriched by following the language of Section 61 and why Section 61 is a[lainst equity and good conscience. The Court again finds this an innovative approach by the County, but does not believe it can be assessed against the State of New York ora State agency. A seventh cause of action seeks to impose a constructive trust over 28 "' Nancy Rose Stormer, PC 315-735-9392 p.30 ~. .- the funds that Respondents were obligated to pay PeUtionerfor Medical Assistance payments made on behalf of DOH prior to January 1, 2006. Petitioner belies that Petitioner and Respondents were in a confidential or fiduciary relationship in administering the Medical Assistance program to ensure that certain mentally disabled medical assistance recipients did receive the medical care that they needed. The Petitioner asserts that Respondents have failed to ensure that proper overburden expenses were identified and paid, have concealed material information . from local districts, have knowingly denied State liabilities, and have failed to completely discharge their duties to the Petitioner. The purpose of a constructive trust is prevention of unjust enrichment by even an innocent party. Simonds v Simonds, 45 NY 2d 233, 242 (1978). Generally, a constructive trust may be imposed when property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest Sharp v_ Kosmalski, 40 NY 2d 199, 121 (1976). The Respondents deny any improper motivation and/or a lack of fair dealing in their relationship with Petitioner. Respondents allege that Petitioner has not established the requ1site element of a breach of any promise as Petitioner continues to cite the law prior to the enactment of Section 61 as well as failing to cite a single judicial precedent for imposition of a constructive trust against any agency of the State of New York. The Court again finds this an innovative request but does 29 > Nancy Rose Stormer, PC 315-735-9392 p.31 .~. ~ .. not belleve that it is appropriate as to the State of New York or a State agency. The Respondents seriously question the applicability of A1iicle 78 to the history and set of facts herein. The question before the Court in this regard is whether the determination by the Department was affected by an er(or of law, or was arbitrary and capricious or an abuse of discretion, or was irrational. Matter of Simmoyv. Boa_rd of Town Trustees of Town of Southold, 61AD3d 763, 764 (2009). Respondents question how the denial or rejection could be an error of law when Section 61 is so clear and unambiguous; was arbitrary or capricious or an abuse of discretion when it conforms to the letter of an existing State law; was irrational when implementing a clear statutory mandate? DOH applied Section 61 as written. Respondents assert that there is a distinction between DOH misapplying, or improperly interpreting Section 61 and D,OH's use of Sectlon 61 to deny reimbursement DOH believes that it took no action other than that expressly mandati:id upon it by the legislative enactment of Section 61. The Court respectfully disagrees with the Respondents. The legislation· was drafted, squirreled away in a massive budget bill and enacted for the purpose of walling off existing debt and avoiding legitimate fiscal responsibility to the counties of the State of New York, which was not proper. 30 Nancy Rose Stormer, PC 315-735-9392 p.32 This constitutes the Decision of the Court. Petitioner's counsel shall submit a proposed Order on notice to Respondents' counsel. Dated: January 15, 2014 at Watertown, New York ENTER 3~ Matter of County of Monroe v Shah Index No. 2014-3162 Stn'REME COURT· STA.TE OJ1 NBW YORK COUNTY OJ<' MONROE lu lhe Matter of the COUNTY OF MONROE J'etltloner-Plainliff, F0:1· a Judgcmi>Ut P1U'S1Jatit· to A1ti,,!c '18·ofthe·.C.Ml Praclke Law ~nd Rules ahd 9 Declamrory J\ldgltl~nt Purornmt lO SccLto·n 3001 0:f.th.e Civil·Pt·aotice Law mid RulM Tndeltil: 201.4-3162 Nm.AV R. SHAH, M.D" M.P.l:L, as-Commissioner of 1he New York St11te De.pttrlmeuc o:fHeeHh and THE NEW YORK STATE .DEPARTMBN.T Oli'TO:lALTH, APPEARANCES; WMITl'lMAN os'r'ERMAN & l:iANl>JA.LLP· CHRJS\l'.Ol'HER E. .BUCKI\Y, ESQ;, ofCocm.st;l AttorBe;vs·Jor. Potl tioL1~r-l!Jrtint1ff O.flice an~. P :o, AddJ•i!sB One.Gonm1~tce.:Plaza AJ~a1iy; NY rn~.o f lf ~ ~. ;"<: i'l"·l ~;:1 ~~ :?.: ~ Q fu ~ ~ ?." ?> ,.;:;;: I w ..,, ~ 0 ~. .- STATE 0.flNEW YORK Ol''F!CE OF ATTORNEY GENERAL J, RICHARD .l3I;NJTI'lZ, Asslstaut Attrimey General, ·of Goim~el Alto1•neys,for Respondents-Defomla.nts Of,tlce and V.O. Addre$S 144 Ei.Jll$eS that PetitionQrfaourred:tln behaif of.Rmpondent3 pdot' to Jani1ur)' !., 2006, purs11unl to Soofol S·ecuticy"Law Section 368~0; 3. Cotilpel'llng RespoudertfS to ldentil'y, oulculate, vedfy·and P'1Y tl10 lotu1 rm11uinlhg.ovei·bl1tden ro11nl111rs!'111e11t due and owing to Petitiono.r pursuant to Soc·inl Se1·vices bwS~ctlo1) %8"u;·4. Declaring Section.().[ ofl'm:t D of . Clm1,rer 56 01"tl1e Lrn·s of 2012 unconstltutionnl, invnlid, and void insofar,as ii: dep1,ive .. ~ Pelilionel' of vested J1i·ope11y rights without d11e process. of .law in violiltion of Al'ticlo I, Scctloll 6 o:Uhe NY ConstiMlon; S. Declaring Sec~ion 61° of P~11D o:f Cllap:te1~ 56 .. of lhe Laws o:f20[2 1moonstitmlo11nl, invalid.and voi(i .inso1'ii1• as lt violnles lltatute--of L.oca'I· Goven\ments Seatio11. 11 (4) or, l\lfermrilvely, Ar!rcle'!X Seefo;1 2(\i)('J) of tho NY. Gon;ll:ihrtio.11 aJ)es Law Seatlon 368~a, for Medical Assistance P-~:i~nents made 011 bdmlf of .DOH; 8, Awartilng .PetUionel'· cast'!, disbm·seinents, and t1Uomeys' fees incnrred ill. oonnoctints. in Con)JJ'elJJ11!}·th<)· State to rein1llm:se tlie Counties fbr overbtil'd@n eiq.ielld!Mo'll in.cmroa prlar·to Ja1ruacy 1, 2006. (See Miitter o/Cottn()! q{Sr Lawrence v. Daines, 81 AD3d 2:12,. (3"1 l.iept, ZUJ 1); Mirtter·vfCoir11ty ofErtu v. Dairies, 83 Al)3d 15()6, (4'" Dept., 201 l); M1111or-.q[Cl)Unty oj'Nii1garCJ v. Daines, 79 ADBtl 1702, (4'" D~pt., 20 IO); il1fll11· q(rJe.rklm~r 'ii, JJ.l'liins, 60 AD3.d 1-460; (4'" Dl'pt., 2009).; See Chem1mg Coun1:y v. Slwh et. a/., t11cle~· # 2013-1 84.9, (Sup. Ct Ch~mung County, Justfoa O'Sitea, 11119/2,01.3)), 'The Th htl D~1xu·lJ11~nt '/\Jtthe1'. jleld that. the.l1!.$J1011den1S could. not retroi10t1wly avoid tht:1lr statutory 1·ein:1buJ"Sement tl'bligattons un:der SoGlnl Se.rvi.oes Law Seotlot\ 36~-a. (,MaltrJr oj'Co11111:y of{)J. Lowrnnc·e v. Shafi, 95 AbJd 1.§48, Cl'~ Dept',, 2012)). Therea(\er, Sectlo11 61 Part D of Chapter 56 of !he.l.•\ws of 2012 was passed by the .Legisfoturc wbicl11irovid.ed,. tbat "notwitktandlngtl1e.j)toYisions. o C sec\tid11 3.68.a of tbo.Socfol Serv'ice~ Law ol'mry otl>"er cd11WH-y·:provlsi9n of.law, no.-reimbursc111e11.t' shall be 1tHJde·for social sc.rvices diBi1'icrn' clal1ns submitted 011 and a1ter the ~ffeotiw dAte .0f th.is paragrnph, for 'cnst1fot ~xpo11di!ures incurred p.dor Ition, have 2 rc:i.\Jscd und d.1.1uied reimbi1t'some11t to the County of Mont·oe·and other Counties fol' tl1clr o v 01· b u!'cleu r~Jm.hu,1-semor1.t, Respo11de.11ts have flied.a verJllcd answer. m:i.d·moved for sum1mu:1 Judgment on tbe d"ciffmtol'y judgmont claims, n•se1tlng ihnt .. ihe amendment to Sectl'on 61 excl.udos Petition~r's overburden ol11ims.1'ecroao1Lvely. · CtJNC.LUSIONS·Of>' LAW! There ha.ve been .s""er.nl .rnfor cuses, wJ1ere. the·same Jmrncr. have been 11i.!sed, througliout U1e SMe wherein the SiipretM·Court· ii\ those· Comtlles:have r~jeotcd. Respo11dents ar~11.n1erit that tl1e mnendment to Section 61 permits thc·Jt claims, (S$.c Chelnimg Cmm"'' ''· Shah el: ,11,. fodex # 2013-1849, (Sup. Ct. Cbemul'llJ' County,,.Ttllitke O'&'hct1, I l/19/2013.;Mauer q(Counl'' qf'Nlc1gc11'a:V. Shall. lnd~x #: :;:O.t 3· 149492, (Sup. Ct., Ningnr« Cmmty, Justice Panep.in!o, June 18, 201.3 ); Malter q( County of SI Lmvre!Ule 11, Shah, Index #: 2()1'.!"140712, (Stip, Ct .. St, 1,awrotice County, .l11st!ce. Derm1rast, Jtily ~ 1, 2013 )~ Matter qf' C'mmly ({/'Sr Law/'e11ce v. Shah, Index. II: 201 J-140998,.(Sup, ·Cl, SL .Lawrence CoUJ:tty, Justlce l)ernmast, .July 3:1, 2013); Maller qfC'azmty qfSt Lawre!Wf. '" Shah, .fnclex #: 2013<1.41656, · (Slip. Cc, SI., Lawrence Cocmty, Jus!.ioe Demm~sl,.,August.2013); Mi:itt1n· qfCount,v1rj'Nlag1rra v. Shah. lndex # 20 t 3-l49492, (Siin. Cl., Nl11gam Gounty,.Justlce Pamjfl11to, 6108113); MatMr of I/iii Counfy o.f'Jefli11•so11 .. v, Shah, liidex.# 20lS·l~~G; (Sup, Ct., Je.ffe.tSoitCounty, J11stlce;.Qilbe1."t, 0 l/15/t4; Cowity OfC'ayuga v. Shdli;, !nde<' lf.20l4-0Z6\, (Sup. Ct., Cayuga County, Jim.Uce Leone, 05/'13114); G<1u11ty (if Broome'" .SY1ah,. !nd~x ii 20l4>0090; (tlup, Ct., B.roome Cou111y, 06/12/M)l Colll'llJ-' qi' Oneida v. Sheth, [1.1dex il.20 l4·52t\, (Sup, Ct., 011~id1,1 Cmmty, 06(11/l 4)), This Court agrees wJrh tb~ t1ulfotm deLem1l.l1lltl011s made ·111 those dcclsloi.ls, and. upon those de1e1111iniitions and the 1·ecotd \\e'l'nre.(bis .Cmtrl, 1'0sptmtle11ts·can1wt1·cly·611 the 2012 amcndnient to Secti()n 61 ra do11)".Pctlrio11cr's uverbll!:den·c(lst~. A.coorcllngly, iris 1.lwct(1re, ORDERED, Umt· Respondents j'lebruruy 2.0,.2014 ai1d Maroh 6, 2Ql 4 denial o'fpQttriprwr's rei.r.nbursemelit cl11irns ls hcrcb)I annulled as·ru:hitrat;y., capricious ·ruid/C)r a:f:foctcd by en:or. day ofFobru:ey 2014, PRESENT: HONORABLE Bl<:!lNA))E'lTE T, CLARK J ns·f n<« l!'resldfog STATE O~ NEW YORK SUPREME coun:ff COUNTY OF ONErPA ln the Matter of COUNTY (JF ONE:nlJA, petlth;ner-Plalntiff, Fo•· a Jndgment 1''1n·B11ant to Article 78 of th~ Civil Practice Law and IR•ol·•• and a Declaratory .Judgment putsuant to Seoti-i:.tt 3001. of the Civil Practice Law NlHA V .R. SllA:El,. MJ>., .\V(.1'.:a., ns Comntls~loner of the New York Ste·~· Department of1Ieal!b and THE NEW yoru;:: S'I'1'! TE IDEI' AR'fMENT OF HEALTH He11pondents-Defendants Procedurol Historv Index No •. CA'.201:3-00.t 788 RJlNo, 32·13-0882 Dedsign. 1tn(I Ord~r On Augum l.9, 201.3, Pell.\i.on.er flled a Notl.oe ofl'etltl.on, V erlfied Petition and Complaint, the Affidavl.t of Christopher E. Buckey with exhibits and Memorandum of.Law. On October 15, 2013, :'le•pondentt flled an Answer to the Notice of Peti.tion and on October 22, 2013 Fetitioncr fikd I) Notice of Amended Verified Petition and Cotnplalnt and-an Amended Verified Petltio11 a,11d Complaint, On or about October 30, 2013 Responden1s' filed an Amended Verified Answer t<: the Petition and Complaint along with a Motion fo1: SunHl1Bt')' Jndgment on the Declaratory Ju(.g;r:nent claims. 02/281201<1 16: 39 3i67986431i SUPREME COURT PA~E 04 Co11sidered on this motion was a Notice of Petition dated August 29, 2-013, fllort$ w!th Petitioner's V orlffod Petition end Complaint also dated Aug>.rnt 29, 2013; Affidavit of Christopher E, Buckley, E~q. sworn to August 29, 2103 together with lllmexed exhibits; Petitioner's Memorand~m of Law in Support ofVei::Lf.ied Petl1fon hments received 011 October 29, 2013; Notice of Motion dated Octobet29, 2013; Mero.or.andu1ii ofJ..aw in Support of~spondents Motion for Surrunru:y Judgment on the Declaratory Ju<;lgmcr;t Claims and Respondentt' Answer to the Artkle 78 Claims dated. October 29, 2013; Notice o;'. Amended Verified Petition and Complaint al.on.g wlth Amended Verified l'etiti.on aud ComplaJ.nt dated Oetober l. 7, 201 J; Respondents' Amended Verified. Answer filed in con,junotlon. wifl1 the psi.ti.es' Stipulation.and Order dated October 17, 2013; Reply Affidavit with attachments r.ifNancy Ros~ Stol'!ller, Esq., swmn to Octi>ber 18, 2013; and Affidavit of Cl.iristoph<>r E. J>udcloy, Esq. with a.ttacbmertts sworn to on October 1 S, 2013. Petitioner .s Sta.t.ute of L<:>oal Govertmtents Section ! 1(4) or, s.lternatively, Ar\Me XI, Seoti.on Z (b)(l) of the New York Constitution ant\ Statute of Local Gr.•vern:rrnents Section 2; (6) awarding: Petitioner damag<;S in an amount to b<' determined at the foal resohrtion of this matter, but in no event less than $3,123,878.56, together with interest; (7) imposing a constructive trust over the fl.m4• that R"'1pondcnts were obligated to reimbu~$e to Petitinnet, pursuant to Social Services Law Section 36&"a , for the Medical AssiStru.)ce payments made on behalf of DOH; (8) awarding Petitioner the costs, disb\irsementa, atl.d a11onioys' fee11 lneurred in connection wi1h this proceeding; and. {9) awarding Petitioner such other aud forth er riJicfas this Court deems just and proper, Analysis Petl.t\oner'c.1 argue that "Respondent's have an ex:press, ma1)dat<:>ry and non-discretionary stai1.1tOcy duty to rem:i:burse Petitioner for the overburden expen~es that Petitioner incurred on behalf of DOH, in. ::el:lance on that duty, Respondents' eau n.ot u.ow rely on a baldly retroactive stat\lte to avoid thlr clear duties and. impair Petitloner's vested right to teill:l.b\lt.>ement." (Potitloner's Amen;!egh the first and second waves ofunsucoessful litigation -at all stops thei:: \i.elief that the C~p otaMe if properly interyreted, walls off teimb11rsement of post C~p overburden claims. Tho 2010 Amendment atte.mpt~.rgumell.t fo easily dispensed with by reference to the Third Departmon1:'s rnlfng ir>Mali~r 1>/Cou11ty of St. Lawronc• v. Shah, 95 A.D.3d 1548 (3~ Dept. 211 ll): . 4 e212e12014 1&:39 3157986436 SUPR~ME COURT "This Co\Jrt hM previously held that prior to 2006, upon payment to DOH for servioos providod to overburden patients for whinh nnllt stand. Insofar as Section 6l attempts to deny the County repayment <1.f obligations already accrued, lt 1$ unoonstit\ltional." PA6E 07 AccorcU1,)g]'~', ~;fter consideration of all of the pleadings and om! argument of eo.,uael, it is therefore Ordered thatR~>Spondents' August 20, 2013 ljlld October J.O, 2013 denial of Petitioner's reimbursement clai.:ns iB hereby awrnlled as arbitrary, capdcimner's claims for reiml:mrsemem and ate directed to pay f'~.titioner's pending claims for rehnburseme11t in the •mount of $3, 123,878..56 within thMy days of service of Notice of Entry of this Order and Judgement; and it is further Ordorod, tl:mt :Resporidenw Motl.on for Summary ,l\1dgrnent is denied; and it is further 5 02/28/Wl.4 lo: 39 3157986431i SUPReME COURT FAGS 08 Ordered, thal Petitioner's reqoost fot costs, d!sb\ll'sement and attorneys feed Is det1led based upon RespoJ:oents' reliance on tlleir belief that Sectlon 61 was a clarifying an1endment and therefore cotistituti'Jnal. to <.leny Petitioner's dalms; a11:0 i.t is fw:tber Ordered, that the remaining relief requested in the pi;;titlon is hereby denied, This shall c:·"n.stlmte the Decision 011d Order of this C Dated: February 2ll, 2014 6 Matter of County of St. Lawrence v Shah Index No. 140712 a.w1d 0<1111M~St, .J.S c;., ~tJ!)lome Cou1 t ~1l C<>Ur\$1i<>;Jncy Rose Stormer, Esq.,_ and Michael Bagge, Esq., of counsel), for Petitioner; Eric T. Schneiderman, Attorney General (C. Harris Dague, Esq,,_ Assistant Attorney General, of counsel), for Respondents. · DEMAREST, J. Medicaid Is a publicly funded health program I Iintended to provide medical services to tne less fortunate members of society. In New York, the benefits are provided through a combination ot sources including the federal, I state and local governments. When It was initially implemented, tl1e counties were required to provide a percentage of the costs according lo specific formulae. These county costs escalated esch year and were substantially increased when the Stale J Jbegan to de-institutionalize certain meotally disabled persons, thus shifting !he burden !I . . . . . . !i ·' . ' " 01\\'l() D>'lfll~{-O"i\, J s c $11J)1en1e C\'.ll1n •!~ Cllllrl fl\rtrnl i:.~nl and othe1.,counties have had lo litigate to collect the money owed them and confront various legal arguments advanced by tlie State In an attempt to avoid payment Every court that has considered these arguments has rejected them and directed the payments be made. M~tter of Coun.Jll of St. bawrenoe ~-Daines, 81 AD. 3d 212 (3d Dep't 2011), Iv. denied 17 N.Y. 3d 703 (2011); Matter of C9JJD1\(..QfJ:IBd1\l1111 ·lll¢1>ltice Law and Rules and a Declarntory Judgme11t Pur,1·uant to Sectlon 3001 of the Civil Prncifoe Law imd Rules NIM V R SHAH, M,D,, l\ll.l'.Il(,, as Commissl.oner of the New York State Department ofHealtb and tlfJfE NEW YORK S'.!'A'Jl'I~ DEl' AlRTMlEN'Jl' Olli' X-llEA)'.lflf.l[, ·Respondents-Defendants. _____ .,___ ··--- ORIGINAL fadexNo.: CV-2013.{)141656 !AS Case No.: 44·1·2013-0476 Demai:est,J. WlBf)lj)J.t®NJ, Petitioner County of St. Lawrence ("Petitioner") oonimeiiced fhe above· captioned hybrid CPLR Article 78 proceeding and plenary action by Verified Petitl011 and Complafo~ dated July 12, 2013, seeking, arno1lg other things, to compel Respondents Nirav R. Sliah, MD,, M.P.H., as Co11.11riissJoner ot'the New York State Departmcll\ of Health and tbe New Yust 9, 2013, and moved for summaty judgment on Petitioner's declaratory judgment.Md· state Jaw 11lenary clahn.s, arguing that Respondents were no longer obligated to reimburse Petitioner for the claims asserted in this proceeding beeatJse Section 61 extinguished Petitioner's right to reimbursement for pre-2006 Overburde11 costs 1mder Soolal Services Law § 368-a; WH!ClU!:AS, Petitioner si!l'Ved the Reply Ai'fimrntlon of Nancy Rose Stormer dated August 1.4, 2013 and tbe Affidavit of Cbrlstophec: E. Buckey sworn to August 14, 2013 on Augm>t J.4, 2013 and opposed Respondents' motion for mnxm1ary judgment on Its declaratory judgm1mt and state law plenary claims. Petitioner contended that Section 61 did not ex:tinguish l?eiitiol)er's right to reimbursement for pre.!2006 Overburden costil under Social Se1·vices Law§ 368"a because: (!) this Court has expressly struck down Section 61, holdll1g that, insofar as Section 61 attempts to d.e11y · l'etitloner repayment of obligations already accmed, it is unconstitwional; (2) !he plain language of Section 61 bars reim.bu1:senient for claims !hat Petitioner was not obligated to submit, and does not impact Respondent~' unilateml arnl nondiscretiooary statutory 'l-long course of intentionally or negligently dilatory conduct pennits this Cotn:t to apply Social Services Law § 36E-a as it existed at the time that Petitioner !ncfii:red the Overburden expenses 011 Respondents' behalJ:; without consideration of Section 61, under the spedal facts exception; (4) Section 61 is not'' cllu·ifying amei;dment, but is a substantive deprivation of PeUtioner's vested rights to reiml:mrnernenl for Overburden expense,9 incurred p1i.or lo J~miary l, 2006 that is being retrmictively applied; (.5) eveu if lhe statutory and regulatory bases for Overburden reimburs,,meitt had been repealed, Petitioner's vosled iights to reimbt1rsem.ent must su1vive pursuant CO GeJ>eral Coii-~truc.tion Law § 93; (6) Section 61 deprives Petitioner of due prooess of law; (7) Respondents' dofonse based on the doctrine of laahes is hawed by collatei-at estoppel; and (8) Section 61 does not ba1· Petitioner from recovering fur converslon, uaju;,t enrichment, and oonstruotive trust: WI!Ji:RJIJ:AS, the Col!rt having heard oral argument o'f cotmsel for the parti.OJJ on August 16, 201.3; and NOW, npm1 due eonsiderntioo of all the pleadings and. proceedings in this matter and. the oral arguments of counsel, it is hereby ORl)EREI~, AlOJflfJJll>GEill AN][) ][)ECJllEE][) !hat, fo1· the reasons set forth in Petitioner's papers, and in thls Court's previous deoisionq itt M.oittor of Cn\1!1ty of.St. Lawrence v £Uwh, Sup Ct, St. Lawre11ce County, July 31, 2013, Demarest, J,, Index No. GV-2013-140712 (a.t!Mbed hernto M Exl!!Rlit A), and Matter of Co1111!:LQ.f St, J., All1JUil1GEID A.NlJJ JIJIECF.lffiEJll that, for the reasons set fortl' in P<0titi.oner's papers, and in the Recent Decisions, Petitioner's reqt1est fol' an order rumulling the Responde11ts' decfalon dated Ap1:il lO, 2013 denying its rolmbmsement claim as bel11g arbitrary, capricious and/or affected by an error oflaw is, in all respects, granted; and it is fut'i:her OXU))H;JRl!;lJ>, AJ),}l[JlJ>GEll> AND DECREED that, for the l"Oasons set forth in Pel.ltioner's papel'S, ci1e Recent Decisions, and in the Third Deportment's decisions in Mattet.JJ[ .County of St Lawre.nce v Shah, 95 A.D.3d !548 (3d Dept 2012) and Matter of Covli!l'..Qf St. 3 Lawrence v .. .Daines, Ill AD3d 212 (3d Dept 201.1), this Cou1t finds that Pethioner's right to reimbumement under Social Soi·vices Law § 36$ .. a acorued prior to 2006, upo11 Petitiolle1•'.g payment to DOH for services provided to overbmdened patients for which no local share was owing; and it is further OJRDElRJUJ, AIDJlJDGED AND lH!:CIREll'.D that, for the reasons set forth in Petitioner's papel'S, the Recent Deoi.sions, m1d in the Third Depaitment's decisions in Matter of:' .c&\JJ1t)'_qf .. S_t,_1l1Wl'ellQ\l.Y Shah. 95 A.D.3d 1548 (3d Dept 2012) and Matter of County of St . . Law\JltmID;RJlm, A[IJIUJ[), ADJIUDGED AND DEClflEEl[) that, for the reasons set forth in I'e·IJtioner's pai,1ers, mid in the Recent Decisions, fais Court finds that insofar as Section 61 attempts tn deny the County repayment of obligatio11s already accrnecl, it is 1mco11stitutio11al; and it i.1 forther ORJ[)lli:l!UtJD>, AD~Jl)GED AND bECrutlED tliat, for the reasons set forth. in Petitioner's pape1·s, m1d in the Recent Decisions, this Court bolds that Section 61 does not extinguish Respondenw' unilateral obl!gation to calculate m·1d. reimburse Petltio110r fo1· the Overburden expenses it incurred on Respondents' behalf prior to January l, 2006, pursuant to SoQial Services Law§ 368-a; and it ls :furthe1· 4 ORJD>EJllF.,I), Alll>JUlll>GED AND ID>l!;CREED that, fm~ the reasonB set forth in Petitione,.'s p11pers, and in the Recen1 Decisions, Petitioner's rnquest for an order h1 the nature of rnandamus directing the Respondents to review, verify and pay m1y legitimate claimed overburden expenses is granted; and it is f:ui.ther ORDERED, ADJUDGED AND lllF.CREED that, for !be J'easons set fortl1 in Petitioner's pa11ers, and in the Recent Decisions, Respondents are directed to pay tlie pending clt1i.m ot'$84,203.96 or provide proof that any Ol' all of the olaim L9 not legitimate witl1hl 30 days of service with Notice nf Entry of this Decision and Order; and it is fu11her ORDElmD, ADJlJllJHGJEJ[) AND ][)JECRl~JF,11) that Respondents m-e dii:ected to forthwith: (A) provide to Petitioner ull infonnation. necessary to identify, verify, and determine the total Overhurd.en expenses that Peti11or1er in.eun·ed on Respondents' behalf prior to Januaty l, 2006, pursmw1t to Socl~I Services Law § 368-a; (B) J.n oooperatiori with Petilloner a.nd Petitioner's 001.1nsel, identi.fy, verify, anrl detem1ine the total Overburden expenses that Petitioner incurred on Respondentg' behalf prior to January !, 2006 using the RF3 claims s\tbmlssion process; and (C) pa.y to Petitionel' the total Overbm~1en oxp®ses that Petitioner incurred on. Respondents' behalf prior to .lamiary 1, 2006, fol' wbioli Petitioner has n.ot already rocelved relmb11rsement pm:suantto Social Services Law§ 368-a; and it is fu11'her ORDlmRmJ), ADJVJ)