In the Matter of County of Cayuga, Appellant,v.Nirav R. Shah,, et al., Respondents.BriefN.Y.September 7, 2016CA 14-01886 To be argued by: VICTOR PALADINO 10 minutes requested Supreme Court, Cayuga County - Index No. 2014-00000261 ~upreme QCourt of tbe ~tate of ~ehl ~ork ~ppellate '.mibi%ion - jf ourtb llepartment IN THE MATTER OF THE APPLICATION Ole COUNTY OF CAYUGA, Respondent, -against- NIRA V R. SHAH, AS COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF HEALTH AND THE NEW YORK STATE DEPARTMENT OF HEALTH, Appellants. BRIEF FOR APPELLANTS ANDREWD. BING Deputy Solicitor General VICTOR PALADINO Assistant Solicitor General of Coun.sel ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for.Appellants The Capitol Albany, New York 12224-0341 (518) 776-2012 OAG No. 14-169894 Dated: January 6, 2015 Reproduced on Recycled Paper Table of Contents Page Table ofAuthorities ............................................................................................ iii Preliminary Statement ........................................................................................ 1 Question Presented .......... , ...................... : ............................................................ 2 Statement of the Case .......................................................................................... 2 A. Pre-2006 Statutory and Regulatory Background Regarding Overburden Claims ........................................................ 3 B. The Medicaid Cap Statute ............................................................... 5 C. Prior Litigation Involving the Cap Statute ..................................... 6 D. The 2012 amendment to the Medicaid Cap Statute ...................... 8 E. This Court's decision in County of Niagara v. Shah and the Third Department's decision in County of St. Lawrence v. Shah interpreting the 2012 amendment ........................................ 9 . F. Statement of Facts ......................................................................... 11 G. This Proceeding .............................................................................. 11 Argument THE 2012 AMENDMENT IS CONSTITUTIONAL ....................................................... 13 A. The Third Department's interpretation of the 2012 amendment in County of St. Lawrence is flawed and should not be followed by this Court ................................................................................... 14 B. The County has no due process clause claim against the State regarding the 2012 Amendment .................................................... 18 i Table of Contents (cont'd) Page Argument, Point I (cont'd) C. The 2012 Amendment is constitutional under a due process vested rights analysis .................................................................... 23 1. . The 2012 Amendment is not unfair .................................... 26 2. The County had at most a minimal reliance interest based on prior law ................................................................ 30 3. The extent of retroactivity is not excessive ........................ 32 4. The 2012 Amendment serves an important public interest .... : ............................................................................. 35 Conclusion ............................................................................................... 37 Addendum ............................................................................................... Al 11 Table of Authorities Cases Page Alliance of American Insurers u. Chu, 77 N.Y.2d 573 (1991) .................................................................................... 24,35 Black Riv. Reg. Dist. v. Adirondack League Club, 307 N.Y. 475 (1954), appeal dismissed, 351 U.S. 922 (1956) ........................... 20 Brothers v. Florence, 95 N.Y.2d 290 (2000) ......................................................................................... 27 Chrysler Properties, Matter of v. Morris, 23 N.Y.2d 515 (1969) ......................................................................................... 24 City of E. St. Louis v. Cir. Ct. for the Twentieth Jud. Cir., St. Clair Cnty, Ill., 986 F.2d 1142 (7th Cir. 1993) ........................................................................... 20 City of New York v. Richardson, 473 F.2d 923 (2d Cir.), cert. denied, 412 U.S. 950 (1973) ............................ 19-20 City of New York v. State of New York, 86 N.Y.2d 286 (1995) ............................................................................... 19,22,35 . Correa-Ruiz v. Fortuna, 573 F.3d 1 (1st Cir. 2009) .................................................................................. 30 County of Herkimer, Matter of v. Dailies, 60 A.D.3d 1456 (4th Dep't), lv. denied, 13 N.Y.3d 708 (2009) ........................... 6 County of Niagara, Matter of v. Daines, 60 AD.3d 1456 (4th Dep't), lv. denied, 13 N.Y.3d 707 (2009) ........................... 6 County of Niagara, Matter of v. Daines, 79 A.D.3d 1702 (4th Dep't 2010), lv. denied, 17 N.Y.3d 703 (2011) .................. 7 County of Niagara, Matter of v. Daines, 91A.D.3d1288 (4th Dep't 2012) ......................................................................... 7 County of Niagara, Matter of v. Shah, 2014 N.Y. App. Div. LEXIS 7738; 2014 N.Y. Slip Op 07781 (4th Dep't Nov. 14, 2014) ........................................................................... passim 111 Table of Authorities (cont'd) Cases (cont'd) Page County of St. Lawrence, Matter of v. Daines, 81A.D.3d212 (3d Dep't), lv. denied, 17 N.Y.3d 703 (2011) ................................ 7 County of St. Lawrence, Matter of v. Shah, 95 A.D.3d 1548 (3d Dep't 2012) ................................................................... 7-8,25 County of St. Lawrence, Matter of v. Shah, 2014 N.Y. App. Div. LEXIS 8230 (3d Dep't November 26, 2014), motion for lv. pending ....... , ........................................................................ passim Dalton v. Pataki, 5 N.Y.3d 243, cert. denied, 546 U.S. 1032 (2005) ............................................ ; .. 13 E.S., Matter of v. P.D., 8 N.Y.3d 150 (2007) ............................................................................................ 13 Gattis v. Gravett, 806 F.2d 778 (8th Cir. 1986) ............................................................................... 30 Gentile v. Garden City Alarm Co., 147 A.D.2d 124 (2d Dep't 1989) ......................................................................... 25 Held v. State of New York Workers' Compensation Board, 85 A.D.3d 35 (3d Dep't), appeal dismissed, lv. denied, 17 N.Y.3d 837 (2011) ...................................................................................... 33-34 Hernandez v. Robles, 7 N.Y.3d 338 (2006) ........................................................................................... 20 Hodes, Matter of v. Axelrod, 70 N.Y.2d 364 (1987) ......................................................................................... 24 Ideal Mutual Insurance Co., Matter of v. Superintendent of Insurance, 82 A.D.3d 518 (1st Dep't 2011) .......................................................................... 33 In Re Real Est. Title & Settlement Servs. Antitrust Litig., · 869 F.2d 760 (3d Cir. 1989) ............................................................................... 20 Jeter, Matter of v. Ellenville Central School District, 41 N.Y.2d 283 (l977) ................................................................... : ..................... 22 iv Table of Authorities (cont'd) Cases (cont'd) Page Krauskopf, Matter of v. Perales, 139 A.D.2d 147 (3d Dep't 1988), aff'd, 74 N.Y.2d 730 (1989) ...................... 21-22 Krauskopf, Matter v. Perales, 74 N.Y.2d 730 (1989) ........................................................................................... 3 OnBank & Trust Co., Matter of, 90 N.Y.2d 725 (1997) ......................................................................................... 34 Roman Catholic Diocese of Albany, N. Y. v. New York State Workers' Compensation Board, 96 A.D.3d 1288 (3d Dep't 2012) ......................................................................... 27 Silver v. Pataki, 96 N.Y.2d 532 (2001) ......................................................................................... 21 South Carolina v. Katzenbach, 383 U.S. 301 (1966) ............................................................................................ 19 Sou20th Dakota v. United States DOI, 665 F. 3d 986 (8th Cir.· 2012) ............................................................................. 20 Spano, Matter of v. Novello, 13 A.D.3d 1006 (3d Dep't 2004), lv. denied, 4 N.Y.3d 819 (2005) .................... 29 Stolowski, v. 234 E. 178th St. LLC, 104 A.D.3d 569 (1st Dep't 2013) ........................................................................ 25 Trenton v. New Jersey, 262 U.S. 182 (1923) ................................................... , ........................................ 19 United States v. Locke, 471 U.S. 84 (1985) .............................................................................................. 30 Williams v. Mayor, 289 U.S. 36 (1933) .............................................................................................. 19 New York State Constitution article I,§ 6 ...................... ~ ......................................................................... 2,11,13 article IX,§ Z(b)(l) ............................................................................................. 11 v Table of Authorities (cont'd) State Statutes C.P.L.R. Page article 78 ...................................................................................................... 1,6,11 S.S.L. § 368-a ........................................................................................................... 11,18 § 368-a(l)(d) ......................................................................................................... 3 § 368-a(l)(h) ............................................................................................... passim Statute of Local Governments § 2 ..................................................................................................................... 11 L. 2005, ch. 58, Part C, § 1 ................................................................................................................ 5;8 § l(a) ................................................................................................................... 6 § l(f) ................................................................................................................... 5 L. 2006, ch. 57, Part A, § 60 ................................................................................................................... 5 L. 2010, ch. 109, Part B § 22 ................................................................................................................. 29 §24 ................................................................................................................... 7 L. 2012, ch. 56, Part D article VII .......................................... ;.,, ................. ; ........................................ 8,27 § 61 ................................................................................................................... 8 § 6l(h) ................................................................................................................... 8 § 65 ................................................................................................................... 9 State Rules and Regulations 18 N.Y.C.R.R. Part 601 ................................................................................................................ 4 § 601.3 ................................................................................................................... 7 § 601.3(c) .............................................................................................................. 7 § 601.4 ................................................................................................................ 26 Part 635 ........................................................................................................... 4,26 United States Constitution Fifth Amendment ......................................................................................................... 19 Fourteenth Amendment .......................................................................................... 20,23 Vl PRELIMINARY STATEMENT In 2012, the Legislature enacted an amendment unambiguously providing that as of April 1, 2012, the Department of Health would no longer reimburse counties for pre-2006 Medicaid overburden claims. The legislative history explains that the purpose of this amendment was to clarify that the State was no longer responsible for pre-2006 overburden costs following the enactment of the 2005 Medicaid Cap Statute. Despite the 2012 amendment, Cayuga County submitted overburden claims to the Department after the 2012 amendment's effective date. After the Department denied these claims based on the 2012 amendment, the County commenced this combined declaratory judgment action and article 78 proceeding to challenge the Department's determinations. Supreme Court, Cayuga County (Leone, J.), declared the 2012amendment unconstitutional, annulled the Department's denial of the overburden reimbursement claims that the County submitted after April l, 2012 and ordered the State to pay the County for these statutorily barred claims (Recor9. ["R."] 11-11). Supreme Court erred in declaring the 2012 amendment unconstitutional. The County failed to meet its heavy burden to demonstrate that the 2012 amendment unconstitutionally impaired its vested rights. Under settled law, the County, as a political subdivision created by the State for the purpose of carrying out the State's governmental powers, has no due process right or vested right regarding the sharing of the costs of governmental programs such as Medicaid. In other words, the Due Process Clause does not limit the Legislature's authority to allocate Medicaid expenses between the State and its political subdivisions as it sees fit, and to change that allocation even after the relevant expenses have been incurred. And even if the County could assert a vested right, the relevant factors in this case support the constitutionality of the 2012 amendment. This Court should therefore declare the 2012 amendment constitutional and dismiss the petitions. QUESTION PRESENTED Whether the County failed to demonstrate beyond a reasonable doubt that the 2012 amendment, which terminated the State's obligation to pay pre-2006 overburden reimbursement to counties, deprives it of property without due process of law in violation of article I,§ 6 of the New York Constitution. STATEMENT OF THE CAS}J The 2012 amendment at issue in these cases is the culmination of a lengthy dispute between the Department of Health and several counties including petitioner Cayuga County. To place the present case in context, the background of the dispute and the prior litigation it engendered are briefly summarized below. 2 A. Pre-2006 Statutory and Regulatory Background Regarding Overburden Claims The Department of Health administers New York's Medicaid program through local social services districts, including petitioner Cayuga County. New York's Social Services Law sets forth the financial responsibilities of the State and local governments regarding medical assistance. Before 2006, in general, after deducting any actual or anticipated federal £uncling, the State and counties each paid roughly 25 percent of total annual Medicaid expenditures. See Social Setvices Law ("SSL") § 368-a(l)(d). There was no cap on annual dollar increases in the counties' liability for their share of Medicaid expenditures. Certain exceptions to this cost-sharing arrangement applied. From the early 1980s through 2005, counties were not responsible for paying any part of the cost of medical services relating to certain "state charges," including the cost of medical services for certain mentally disabled Medicaid recipients eligible for "overburden reimbursement" under SSL § 368-a(l)(h) (R. 293- 294). The cost of Medicaid services provided to mentally disabled recipients qualified for overburden reimbursement where the recipients met certain criteria. See SSL § 368-a(l)(h); Matter of Krauskopf u. Perales, 7 4 N.Y.2d 730 (1989). 3 The counties' claims for overburden reimbursement arose because counties initially paid their full local shares of total Medicaid expenditures for all covered services provided to Medicaid recipients, including services . provided to overburden patients for which no local share was owing (R. 295). The Department then identified therecipients who were overburden patients and reimbursed the counties each quarter (R. 296-297). The Department furnished counties with certain reports from which they could ascertain if the State had failed to reimburse them for any overburden-eligible individuals (R. 296-297). If a county believed that the Department had omitted recipients who met the overburden criteria, it could submit a letter with supporting information to the Department (R. 297, 328), or it could submit claims for any additional overburden reimbursement under 18 N.Y.C.R.R. Parts 601 and 635. The State's overburden reimbursement system largely accomplished its objectives. Over the 22-year period from 1984 through 2005, the Department reimbursed counties for billions of dollars in overburden expenditures. But due to the large number of Medicaid recipients and the complexity of identifying those who were overburden-eligible, the Department's quarterly review process did not capture all overburden reimbursements owed to counties. Although the Department made available a claiming process by which counties could recover any missed overburden payments, many 4 counties, including Cayuga County, did not avail themselves of this process until after 2005, when the Legislature radically altered the Medicaid cost- sharing system through the enactment of the Medicaid Cap Statute. B. The Medicaid Cap Statute In 2005, in response to concerns about rapidly increasing Medicaid costs and local property taxes, the Legislature enacted the Medicaid expenditure cap statute to limit counties' financial responsibility for Medicaid expenditures. See L. 2005, ch. 58, Part C, § 1, as .amended by L. 2006, ch. 57, Part A, § 60 ("Cap Statute") (reproduced in addendum to this brief). As of January 1, 2006, the Cap Statute replaced the old cost-sharing system under which counties were generally responsible for 25 percent of New York's Medicaid expenses, without any cap or ceiling limitation. Under the Cap Statute, counties are no longer responsible for a fixed percentage of Medicaid expenses, which had resulted in open-ended and thus unpredictable increases in the counties' financial exposure. Instead, a county's local share of Medicaid expenditures is capped at a dollar amount that is fixed each year pursuant to the formula in the Cap Statute. But the Cap Statute is a two-way street. While a county cannot be required to pay more than its cap amount, it generally must pay its full cap amount. See Cap Statute § l(f). 5 The cap methodology now governs the Department's reimbursement of counties for Medicaid expenses "notwithstanding the provisions of section 368-a of the social services law," which includes the overburden reimbursement provisions. Cap Statute § l(a). As a result, after the law went into effect on January 1, 2006, the Department determined that it was precluded from reimbursing counties for overburden payments formerly authorized by SSL § 368-a(l)(h), even if the county incurred its local share of the Medicaid expenditure before 2006, because that would result in the county paying less than its full cap amount for the year in which it received the payment. C. Prior Litigation Involving the Cap Statute In 2007 and 2008, Niagara and Herkimer counties submitted overburden claims to the Department that accrued before the Medicaid Cap Statute's effective date. The Department denied the claims on the ground that they were barred by the Cap Statute, prompting the counties to bring article 78 proceedings to challenge the denials. In 20D9, this Court concluded that the Department had impermissibly applied the cap statute retroactively to the counties' pre-2006 overburden claims. Matter of County of Herkimer v. Daines, 60 A.D.3d 1456 (4th Dep't), lv. denied, 13 N.Y.3d 707 (2009); Matter of County of Niagara v. Daines, 60 A.D.3d 1456 (4th Dep't), lv. denied, 13 N.Y.3d 708 (2009). The Third Department subsequently agreed that the · 6 Department had impermissibly applied the Medicaid Cap retroactively to pre-2006 overburden claims. Matter of County of St. Lawrence v. Daines, 81 A.D.3d 212, 214-16 (3d Dep't), lv. denied, 17 N.Y.3d 703 (2011). This Court and the Third Department also held that the time limit in 18 N.Y.C.R.R. § 601.3(c) did not bar the county's submission of overburden claims. Id. at 217-18; accord Matter of County of Niagara v. Daines, 79 A.D.3d 1702 (4th Dep't 2010), lv. denied, 17 N.Y.3d 703 (2011). After the Court of Appeals denied the State's motions for leave to appeal in St. Lawrence I and in Niagara II in June 2011, the Department promptly paid the overburden claims at issue in those cases, and in all other pending cases in which the only defenses were the Medicaid Cap and the time limit in§ 601.3. In 2010, while this litigation was pending, the Legislature enacted an amendment that the Department interpreted as barring current reimbursement of county overburden expenditures incurred in the past. See L. 2010, ch. 109, Part B, § 24. But both this Court and the Third Department annulled the Department's denials of overburden claims based on the 2010 amendment, concluding that the 2010 amendment did not clearly and unambiguously extinguish the State's obligation to pay pre-2006 overburden claims. Matter of County of Niagara v. Daines, 91A.D.3d1288, 1290 (4th Dep't 2012); Matter of County of St. Lawrence v. Shah, 95 A.D.3d 1548, 7 1552 (3d Dep't 2012). The Department then promptly paid the overburden claims at issue in those proceedings. D. The 2012 amendment to the Medicaid Cap Statute In response to the court rulings that the 2010 amendment did not eliminate state reimbursement for pre-2006 overburden claims, in 2012 the Governor proposed, and the Legislature enacted, another amendment to the Medicaid Cap Statute to clarify that overburden reimbursement was not available under the Medicaid Cap. The Governor included this amendment in the Executive's article VII budget bill, which was submitted to the Legislature in January 2012 (R. 304-305). The Legislature adopted the Governor's proposed bill as section 61 of Part D of chapter 56 of the laws of 2012, adding a new subdivision (h) to the Medicaid Cap Statute ("the 2012 amendment"). The 2012 amendment unambiguously ended overburden reimbursement: 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 [366] of the social services law as a result of a mental disability, formally referred to as human services overburden aid to counties. L. 2012, ch. 56, Part D, § 61 (amending L. 2005, ch. 58, Part C, § 1) (reproduced at R. 131). The 2012 amendment was made effective 8 prospectively on April 1, 2012. See L. 2012, ch. 56, Part D, § 65 (reproduced in addendum to this brief). {Jnlike the 2010 amendment, which lacked any legislative history, the 2012 amendment's legislative purpose to end the State's financial responsibility for the counties' pre-2006 overburden expenses was clearly stated in the memorandum in support. The amendment's purpose was to "clarify that local governments cannot claim for overburden expenses incurred prior to January 1, 2006 when the 'local cap' statute that limited local contributions to Medicaid expenditures took effect" (R. 331). The 2012 amendment was a response to "adverse court decisions that have resulted in State costs paid to local districts for pre-cap periods, which conflict with the original intent of the local cap statute" (R. 331). E. This Court's decision in County of Niagara v. Shah and the Third Department's decision in Connty of St. Lawrence v. Shah interpreting the 2012 amendment Counties throughout the state have challenged the 2012 amendment on many grounds, claiming that it is unconstitutional and that the Department should be estopped under the special facts exception from invoking the 2012 amendment to deny pre-2006 overburden claims. In Matter of County of Niagara v. Shah, 2014 N.Y. App. LEXIS 7738, 2014 N.Y. Slip Op 07781 (4th Dep't Nov. 14, 2014), this Court held that the special facts exception was unavailable to preclude the Department from invoking the 2012 amendment. 9 And this Court further held that the 2012 amendment retroactively extinguished any obligation on the part of the State to pay pre-2006 overburden claims, and according reversed the grant of mandamus relief directing the Department to identify, calculate, and pay all outstanding overburden reimbursement owed Niagara County. But the Court did not decide whether the 2012 amendment was constitutional. Instead, this Court remitted the matter to Supreme Court to decide this issue in the first instance. The Third Department reached a contrary interpretation of the 2012 amendment in Matter of County of St. Lawrence v. Shah, 2014 N.Y. App. LEXIS 8230 (3d Dep't Nov. 26, 2014). Although the Third Department held that the special facts exception did not apply, it concluded that the 2012 amendment did not retroactively extinguish counties' right to reimbursement under SSL § 368-a(l)(h). Accordingly, the Third Department affirmed the grant of mandamus relief directing the Department to identify, calculate, and pay all outstanding overburden reimbursement owed,St. Lawrence County. Although the Third Department concluded that the 2012 amendment was constitutional, it did so by interpreting the statute as imposing a statute of limitations on counties' submission of overburden reimbursement claims and by imputing a six·month grace period for the continued submission of such claims. 10 F. Statement of Facts Within weeks after the introduction of the bill that became the 2012 amendment; Cayuga County submitted a flurry of additional claims for overburden reimbursement to the Department totaling $1,571, 195 (R. 305, 1 51). In June 2012, the Department paid all the claims that the counties submitted before April 1, 2012 (R. 305, 1 51 & n.23). After the April 1, 2012 effective date of the 2012 amendment, petitioner continued to submit overburden claims totaling $416,630, which the Department denied based on the 2012 amendment (R. 305, 11 52·53). G. This proceeding Thereafter, Cayuga County commenced this combined article 78 proceeding and declaratory judgment action against the Department and its Commissioner. The County alleges that the 2012 amendment does not relieve the State of its reimbursement obligation under Social Services Law § 368·a. The County also alleges that the 2012 amendment deprives it of its vested right to reimbursement for overburden expenses without due process of law in violation of article I, § 6 of the New York Constitution and therefore should be declared null and void (R. 47-50). And the County alleges that the 2012 amendment is void under article IX,§ 2(b)(l) of the New York Constitution and§ 2 of the Statute of Local Governments (R. 51-52). 11 In addition, the County alleges that respondents are guilty of intentional and/or negligent conduct with respect to overburden reimbursement, including intentionally altering or miscoding overburden eligible individuals in the State-operated computer system used to track Medicaid payments, dilatory conduct, and bad faith. On this basis, the County alleges that respondents should be precluded from invoking the 2012 amendment to deny petitioner's overburden claims. Further, the County alleges that the State has been unjustly enriched at the County's expense and that the court should impose a constructive trust over the overburden reimbursement to which it is entitled (R. 54). Respondents answered the petitions/complaints, and the parties cross-moved for summary judgment. Supreme Court declared the 2012 amendment unconstitutional, annulled the Department's determination and directed it to pay Cayuga County's overburden reimbursement claims at issue here (R. 10-11). The court denied the Qounty's remaining request for an relief (R. 11), including its request for an order in the. nature of mandamus compelling the Department to identify, calculate, and pay all outstanding overburden reimbursement owed to the County (R. 47, if 117). 12 ARGUMENT THE 2012 AMENDMENT rs CONSTITUTIONAL Supreme Court erred insofar as it declared the 2012 amendment unconstitutional. As a statute duly enacted by the Legislature and signed by the Governor, the 2012 amendment enjoys a strong presumption of constitutionality, see Dalton v. Pataki, 5 N.Y.3d 243, 255, cert. denied, 546 U.S. 1032 (2005), and may not be annulled except upon a showing that it is unconstitutional "beyond a reasonable doubt." Matter of E.S. v. P.D., 8 N.Y.3d 150, 158 (2007). The County has failed to carry that heavy burden. Supreme Court concluded that the 2012 amendment deprives the County of its vested right to reimbursement for overburden expenses in violation of article I, § 6 of the New York Constitution, which provides in relevant part that "[n]o person shall be deprived of life, liberty or property without due process of law." We explain in points I(B) and I(C) below that this conclusion is in error for two reasons. First, under settled law, the County, as a political subdivision of the State derivin.g its power and authority wholly from the State, is not a "person" who can have a New York constitutional due process clause claim against the State; consequently, the County cannot mount a vested rights challenge to a state law that reallocates, even retroactively, how the State and its political subdivisions share the cost of a governmental program. Second, even if the County could 13 properly claim a due process right based on the statutory allocation of Medicaid costs between the State and its political subdivisions, the 2012 amendment is constitutional under the balancing test applied by the Court of Appeals in vested rights cases. A. The Third Department's interpretation of the 2012 amendment in County of St. Lawrence is flawed and should not be followed by this Court. The Third Department recently held that the 2012 amendment was constitutional. See Matter of County of St. Lawrence u. Shah, 2014 N.Y. App. Div. LEXIS 8230. But it reached this conclusion based on a mistaken interpretation of the 2012 amendment that is in direct conflict with this Court's interpretation of the 2012 amendment in Matter of County of Niagara v. Shah, 2014 N.Y. App. Div. LEXIS 7738 (4th Dep't Nov. 14, 2014). Although the Third Department conciuded that the 2012 amendment did not retroactively extinguish counties' right to reimbursement under SSL § 368-a(l)(h), this Court in County of Niagara v. Shah held that the 2012 amendment "has retroactively changed the law" by e}!:tinguishing the State's obligation to pay counties for pre-2006 overburden reimbursements. 2014 N.Y. App. Div. LEXIS 7738 at *6. The Third Department construed the 2012 amendment as merely imposing a statute of limitations on the counties' submission of overburden claims, and imputed a six-month grace period for the continued submission of such claims. 14 In addition, the Third Department reasoned that the 2012 amendment did not repeal SSL § 368-a(l)(h) or extinguish the State's obligation to identify, calculate, and pay overburden reimbursements to counties, even apart from any overburden claims the counties might submit. Based on this reading of the 2012 amendment, the Third Department affirmed Supreme Court's directive that the Department identify, verify, and pay the total unpaid overburden expenditures that the County incurred before 2006. 2014 NY Slip Op 08278 at *8-*9. However, in County of Niagara v. Shah, this Court reached precisely the opposite conclusion on this issue. It rejected the County's contention that the 2012 amendment was "inapplicable because respondents have an ongoing duty to reimburse petitioner for all prior overburden expenditures without regard to whether petitioner submits a claim." 2014 N.Y. App. Div. LEXIS 7738 at *8. As this Court explained, if it were to "accept petitioner's contention that respondents must forthwith search out all prior possible instances of unreimbursed overburden expenditures and submit payment for them to petitioner notwithstanding [the 2012 amendment], then there is no situation in which a claim for such payment will be submitted. Thus, there will be no situation in which [the 2012 amendment] will apply, rendering it a nullity." Id. at *8-*9. Accordingly, this Court reversed the judgment in County of Niagara v. Shah, which had directed DOH to unilaterally identify, 15 calculate, and pay all outstanding overburden reimbursement owed to the County - the very mandamus relief the Third Department affirmed in County of St. Lawrence II. In other words, the Third Department's interpretation - that the 2012 amendment is merely a statute of limitations and does not extinguish the State's duty to reimburse counties for overburden expenditures whether or not the counties have submitted claims - is precisely the interpretation that this Court in County of Niagara v. Shah correctly rejected because it would nullify the 2012 amendment. The legislative history of the 2012 amendment makes abundantly clear that its purpose was to end overburden reimbursement and overturn adverse court decisions that continued such reimbursement (R. 380). Since, under this Court's analysis, the 2012 amendment is not a statute of limitations, the Third Department's imputations of a 6-month grace period also conflicts with this Court's decision in County of Niagara v. Shah and thus should not be followed. But even if the 2012 aml'Jndment were treated like a statute of limitations, the Third Department erred in engrafting a 6- month grace period onto the 2012 amendment in order to uphold it. What grace period, if any, to provide is for the Legislature, not the courts, to decide. The Legislature could reasonably have determined counties had already had sufficient time to submit overburden claims: when the 2012 amendment was 16 enacted, overburden claims were between seven and twenty-eight years old. Moreover, after the amendment was included in the Governor's budget bills in mid-January 2012, counties submitted a flurry of overburden claims before April 2012, all of which were paid (R. 343, if 52 & n.23). Since counties already had more than sufficient time to submit overburden claims, there was no need to engraft a grace period onto the statute· to preserve its constitutionality. By imputing an .additional six-month grace period onto the statute, the Third Department improperly second-guessed the Legislature's judgment that overburden reimbursement should end as of April 1, 2012. For these reasons, this Court, in deciding the constitutionality of the 2012 amendment, should decline to follow the Third Department's decision in County of St. Lawrence II. Instead, this Court should uphold as constitutional the 2012 amendment, as enacted by the Legislature and correctly interpreted by this Court. The 2012 amendment is constitutional for two reasons: first, counties are not persons entitled to due process protection from state statutes; and second, even if counties can assert a due process claim against a state statute, the 2012 amendment is constitutional under a due process vested rights analysis. 17 B. The County has no due process clause claim against the State regarding the 2012 Amendment. The County's due process arguments rest on a simple, but fundamentally flawed, analogy. The County likens itself to a creditor and the State to a debtor. It has repeatedly characterized the overburden litigation as a simple collection action. Based on this false premise, the County contends that the Legislature, through the 2012 amendment, has unconstitutionally attempted to extinguish a debt owed to the County, thereby depriving it of vested property rights. This analogy is mistaken. Social Services Law § 368-a, the statute on which the County bases its due process claim, does not create property "rights" in favor of a political subdivision against the State. To the contrary, this statute allocated the financial responsibilities of the State and local social services districts with respect to Medicaid expenditures before January 2006. To be sure, that statute imposed obligations on the Department, as the State's administrator of the Medicaid program. While that statute was in effect, counties could obtain judicial relief if the Department did not comply with its statutory obligations. But the Legislature retains ultimate authority to change the allocation of the State's and the counties' fiscal responsibilities for Medicaid expenditures. That authority includes extinguishing stale reimbursement 18 obligations like those at issue here, which are as much as 30 years old. When the Legislature does so, as it did in the 2012 amendment, it does not impair any property right belonging to a county. Thus, Supreme Court erred in holding the 2012 amendment unconstitutional. The State's allocation or reallocation of the costs of government between itself and its political subdivisions creates no vested rights that a county may invoke against the State. Counties such as petitioner .are political subdivisions created by the state itself "for the convenient carrying out of the State's governmental powers and responsibilities as its agents." City of New York v. State of New York, 86 N.Y.2d 286, 290 (1995). As a result, a county has "no privileges or immunities under the federal constitution which it may invoke in opposition to the will of its creator." Williams v. Mayor, 289 U.S. 36, 40 (1933) (Cardozo, J.); see also Trenton v. New Jersey, 262 U.S. 182, 186-87 (1923) (federal constitution does not bar a state from taking municipal property without comperisation). Just as states are not persons within the meaning of the Fifth Amendment's Due Process Clause, South Carolina v. Katzenbach, 383 U.S. 301, 323-24 (1966), so too are political subdivisions not persons entitled to federal due process protection from the states that created them. City of New York v. Richardson, 473 F.2d 923, 929 (2d Cir.) ("[p Jolitical subdivisions of a state may not challenge the 19 validity of a state statute under the Fourteenth Amendment"), cert. denied, 412 U.S. 950 (1973); City of E. St. Louis v. Cir. Ct. for the Twentieth Jud. Cir., St. Clair Cnty, Ill., 986 F.2d 1142, 1144 (7th Cir. 1993) (municipalities are not persons for due process purposes); see also South Dakota v. United States DOL 665 F.3d 986, 991 & n.4 (8th Cir. 2012) (expressing doubt whether political subdivisions are persons, but not deciding issue); but see In Re Real Est. Title & Settlement Servs. Antitrust Litig., 869 F.2d 760, 765 n.3 (3d Cir. 1989) (school districts are persons for due process purposes). Although New York courts have sometimes construed the New York constitution's due process clause more expansively than the Supreme Court has construed the federal clause, Hernandez u. Robles, 7 N.Y.3d 338, 361-62 (2006), New York has followed federal decisions holding that political subdivisions cannot challenge state statutes on due process and similar constitutional grounds. The Court of Appeals has explained that the "alteration, impairment or destruction of [the] powers [of a political subdivision] by the Legislature presents no question 9f constitutionality" and does not implicate the due process clause. Black Riv. Reg. Dist. u. Adirondack League Club, 307 N.Y. 475, 487 (1954) (emphasis added, citations and paragraph break omitted), appeal dismissed, 351 U.S. 922 (1956). Indeed, "political power conferred by the Legislature confers no vested right as against the government itself* * * The concept of the supreme power of 20 the Legislature over its creatures has been respected and followed in many decisions." Id. at 488. The County's due process/vested rights challenge to the 2012 amendment is barred by these controlling authorities. This bar goes to the merits of the County's constitutional claim; it is not simply a question whether the County has capacity or standing. On this issue, this Court should decline to follow Matter of County of St. Lawrence v. Shah, 2014 N.Y. App. Div. LEXIS 8230 (3d Dep't Nov. 26, 2014), motion for lv. to appeal pending. There, the Third Department concluded that the Department's argument that the County was not a person for purposes of mounting a due process challenge to a State law was essentially an argument that the County lacked capacity. 2014 N.Y. App. Div. LEXIS 8230 at *3·*4. Any argument that the County lacked capacity, the Third Department held, had been waived because it was not raised in Supreme Court. The Third Department's conclusion is erroneous. The argument that a County is not a person within the meaning of New York's due process clause is separate and distinct from the affirmative defense that the County lacks capacity. Capacity is a threshold issue, and concerns a litigant's power to appear and bring its grievance before the court. Silver v. Pataki, 96 N.Y.2d 532, 537 (2001). Even if the County has capacity here because it claims a proprietary interest in a specific fund of money, see Krauslwpf v. Perales, 21 139 A.D.2d 147, 153 (3d Dep't 1988), aff'd, 74 N.Y.2d 730 (1989) (which did not involve a due process claim), the County's due process vested rights claim fails on the merits because a political subdivision is not a person entitled to due process protection and, thus, lacks the substantive right to challenge a State law on due process grounds. In other words, the Third Department failed to distinguish between the county's authority to sue (capacity) and its entitlement to protection under the due process clause (the merits). The only authority the Third Department cited for its conclusion, City of New York v. State of New York, 86 N.Y.2d 286 (1995), did not involve a challenge by a political subdivision to a statute on due process grounds. That case addressed only the doctrine of capacity and did not suggest - let alone hold - that capacity and personhood and personhood for purposes of a due process claim are the same. In contrast, the cases that have squarely addressed the question of whether a political subdivision is a person (see cases cited on pages 20-21, supra) have held that political subdivisions are not persons entitled to due process protection. New York case law is in accord with these federal authorities. For example, in Matter of Jeter v. Ellenville Central School District, 41 N.Y.2d 283, 287 (1977), a city board of education and a city department of social services alleged that a state law imposing certain educational costs on them violated their rights to due process and equal protection. The Court held that 22 while these municipal entities had standing to challenge the state law, they lacked the "substantive right" to mount state and federal due process and equal protection challenges to the law. Id. In so concluding, the Court followed the federal authorities holding that political subdivisions of a state may not challenge the validity of a state statute under the Fourteenth Amendment. Id. Similarly, here the County has no "substantive right," that is, no due process claim that it was deprived of vested property rights by the Legislature that created it. The New York Constitution's Due Process Clause does not restrict the Legislature's authority to allocate the cost of Medicaid expenses between the State and its counties as it sees fit, and to change that allocation even after the relevant expenses have been incurred. Once the Legislature unambiguously extinguished overburden reimbursement, the County, as a political subdivision of the State, could have no due process claim against the State for further overburden payments. Consequently, petitioner's due process/vested rights claim has no m\)rit and Supreme Court erred in declaring the 2oi2 amendment unconstitutional. C. The 2012 Amendment is constitutional under a due process vested rights analysis. The conclusion that the County has no due process vested rights claim on the merits against the State suffices to dispose of the County's 23 constitutional claim and require reversal here. But even ifthe County had a due process claim against the State, the 2012 amendment would not violate the County's vested rights. There is no merit to the County's argument that because the County incurred overburden expenses before 2006 at a time when overburden reimbursement was required by statute, the Legislature can never terminate the County's claims for those expenses. As the Court of Appeals has observed, "the vested rights doctrine is conclusory, and indeed a fiction." Matter of fiodes v. Axelrod, 70 N.Y.2d 364, 370 (1987). Although older cases evinced an aversion to retroactive legislation generally, "the modern cases reflect a less rigid view of the Legislature's right to pass such legislation and more candid consideration - on a case-by-case basis - of the various policy considerations upon which the constitutionality of retroactive legislation depends." Id. at 371. Determination of whether legislation impermissibly impairs vested property rights entails a balancing of "a number of factors, including fairness to the parties, reliance on pre-existing law, the extent ofretroactivity, and tl;le nature of the public interest to be served by the law." Alliance of American Insurers v. Chu, 77 N.Y.2d 573, 586 (1991) (internal quotations omitted); see Hodes, 70 N.Y.2d at 370; Matter of Chrysler Properties v. Morris, 23 N.Y.2d 515, 518 (1969). The balance of these factors in this case tips decisively in favor of the 2012 amendment. 24 In Matter of County of St. Lawrence v. Shah I, 95 A.D.3d at 1554, the Third Department held that the 2010 amendment to the Cap Statute did not extinguish pre-2006 overburden claims. In dictum, the Court concluded that "the 2010 amendment, even ifit 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. This conclusion was dictum, because it was expressly· hypothetical and not necessary to the court's holding that the 2010 amendment was not intended to extinguish pre-2006 overburden claims. As dictum, this language is not binding on either this Court or appellants. See Stolowski v. 234 E. 178th St. LLC, 104 A.D.3d 569, 570 (1st Dep't 2013). Moreover, the constitutionality of the 2010 amendment was neither briefed nor argued in Matter of County of St. Lawrence v. Shah, and the Third Department did not analyze any of the relevant factors in support of the language. As we explain below, analysis of the relevant factors establishes that the 2012 amendment is constitutional, and consequently, the dictum in Matter of County of St. Lawrence v. Shah I should not be followed here. See Gentile v. Garden City Alarm Co., 147 A.D.2d 124, 132 (2d Dep't 1989) . (Appellate Division is not bound by its prior dicta). 25 1. The 2012 Amendment is not unfair. 'I'he 2012 amendment is not unfair to the County. The County's claims are stale, in some cases dating back decades. The 2012 amendment terminating these claims is part of a new cost sharing system under the cap . statute pursuant to which New York's counties have been relieved of responsibility for billions of dollars of Medicaid expenditures. Thus, there is no merit to the County's claim below that extinguishment ofpre-2006 overburden liabilities is unfair because those monies were due and owing, the failure to pay them is the State's fault, and the State has not undertaken a project to calculate and determine the total overburden reimbursement owed counties dating back to 1984. The Legislature took a different view of the matter, determining that the time has come to close the books on these stale claims. Long before the advent of the new Medicaid cap cost-sharing system, the State made available a process under 18 N.Y.C.R.R. § 601.4 and Part 635 by which counties could have submitted claims for overburden reimbursement. Petitioner and some other counties, however, failed to fully take advantage of that process until after the Medicaid Cap Statute went into effect in 2006 .. By the time the Legislature passed the 2012 amendment, overburden claims were between seven and twenty-eight years old. Governmental operations, especially fiscal planning, are compromised by such stale reimbursement 26 claims of indeterminate amounts, and it was reasonable for the Legislature to extinguish the claims. Even so, as it considered the 2012 amendment, the Legislature afforded counties an opportunity for one last round of claims, allowing payment of pre-2006 overburden claims submitted before April 1, 2012. After the amendment was included in the Governor's article VII bills in mid-January 2012, petitioner and other counties submitted a flurry of overburden claims before April 2012, all of which the Department paid (R. 305 & n.23). The Legislature's judgment in affording this opportunity is entitled to deference. · See Brothers v. Florence, 95 N.Y.2d 290, 301 (2000) (if the Legislature shortens a statute of limitations period but sets a reasonable grace period, "its determination of what constitutes a reasonable time is entitled to deference in the absence of some 'palpable error'''); Roman Catholic Diocese of Albany, N. Y. v. New York State Workers' Compensation Board, 96 A.D.3d 1288, 1290 (3d Dep't 2012) ("due process is satisfied when the Legislature expressly sets a 'reasonable grace period"'). There is nothing inequitable in this result. The 2012 amendment is part of the Medicaid Cap statute which has saved counties billions of dollars since its enactment in 2005. Although counties can no longer obtain reimbursement for old overburden claims, they enjoy substantial savings from the new cap methodology. For the five-year period between the 2005- 27 2006 fiscal year and the 2009-2010 fiscal year, counties saved approximately $6.4 billion "as a result of the Medicaid cap and an additional $2.5 billion as a result of the State takeover of Family Health Plus," a Medicaid expansion program (R. 895); Petitioner itself has saved more than $12 million since the Medicaid Cap's inception (R. 302, ii 43). And because the counties' financial obligations are now fixed, the cap provides them with stability and predictability with respect to their future Medicaid obligations. Thus, the financial trade-offs reflected in the Cap Statute as amended in 2012 strongly favor the counties: although the law terminated the state overburden claims, the counties have saved billions in present and future Medicaid expenditures. Another positive trade-off that counties have received under the new cap regime is protection from pre-2006 Medicaid liabilities. Although the Cap Statute as amended in 2012 does not allow for reimbursement ofpre- 2006 Medicaid claims, the statute shields counties from pre-2006 liabilities they otherwise would owe under the old cost-sharing system, including paying for federal disallowances of old Medicaid exp~nditures. For example, if this year the federal government finalized an audit and disallowed federal funding for millions of dollars in Medicaid expenditures incurred before 2005, under the cap law the County would not have to contribute to the disallowance, unless the disallowance resulted from the county's failure to properly administer the Medicaid program (R. 302, ii 42). See L. 2010, 28 ch. 109, Part B, § 22. This is in contrast to the old system, under which counties would have had to pay their percentage share of the disallowance, regardless of fault. See Matter of Spano v. Novello, 13 A.D.3d 1006, 1007-08 (3d Dep't 2004), lv. denied, 4 N.Y.3d 819 (2005). Similarly, if today a court were to grant judgment in favor of health care providers and order the Medicaid program to retroactively pay them increased Medicaid reimbursement for pre-2006 services, the cap would shield the counties from having to contribute to the court-ordered payments. Under the old system, counties would have been required to contribute to such increased retroactive payments resulting from court orders. But here the County seeks the benefits of both cost-sharing systems and the burdens of neither: It now enjoys substantial savings from the Medicaid cap, protection from pre-2006 liabilities (i.e., federal disallowances and judgments directing increased reimbursement for providers), and at the same time it seeks reimbursement for state overburden claims payable only under the old law. The Legislature, in enacting the Cap Statute and the 2012 amendment, made the reasonable policy decision that the substantial financial benefits counties receive from the new cap law, including the protection it affords from old liabilities, warranted extinguishment of pre- 2006 overburden claims. 29 The courts may not overrule the Legislature's policy judgment simply on the basis of a contrary policy judgment. Even if counties are entitled to due process protection, the legislative process itself - in which they lobbied vigorously against the 2012 amendment - afforded thein constitutionally adequate process. See United States v. Locke, 471 U.S. 84, 108 (1985) ("In altering substantive rights through enactment of rules of general applicability, a legislature generally provides constitutionally adequate process simply by enacting the statute, publishing it, and, to the extent the statute regulates private conduct, affording those within the statute's reach a reasonable opportunity both to familiarize themselves with the general requirements imposed and to comply with those requirements"). "While the legislative alteration or elimination of a previously conferred property . interest may be a 'deprivation,' the legislative process itself provides citizens with all of the 'process' they are 'due."' Gattis v. Gravett, 806 F.2d 778, 781 (8th Cir. 1986); see also Correa-Ruiz v. Fortuna, 573 F.Sd 1, 15 (1st Cir. 2009) (same). Thus, under all the relevant circumstances, the 2012 Amendment was fair and reasonable. 2. The County had at most a minimal reliance interest based on prior law. By April 1, 2012, any reliance by the County on pre-2006 law to support its view that reimbursement of its pre-2006 overburden claims would 30 continue indefinitely was unwarranted. Before 2012, the County had ample forewarning that its claims might be extinguished. The County does not deny that the 2005 Cap Statute extinguished the State's responsibility for· overburden reimbursement prospectively for periods after 2005 - all the County's claims pertain to periods before 2006. Yet the County waited over six more years before pursuing the claims at issue here. Although before 2006, the County expected based on then-existing law. that it would be reimbursed for overburden expenditures that it incurred, it had no reason to believe that its claims might not be altered by subsequent . law, or that it could indefinitely postpone the submission of its claims. Moreover, after 2005, the County did not rely on prior law to incur any new reimbursable expenditures or take other affirmative detrimental actions. The County's only reliance after 2005 was its failure to submit all of its pre- 2006 claims during the more than six years after the Cap Statute went into effect and before the 2012 amendment unambiguously extinguished overburden reimbursement. Although the County might have initially expected that it would continue to be reimbursed for pre-2006 claims despite the Cap Statute, the enactment of that statute, the Department's interpretation of it, and the ensuing litigation at the very least gave petitioner reason to be cautious in relying on its ability to indefinitely postpone its claims. In addition, the 31 Legislature's enactment of the 2010 amendment, and the Department's application of that law, gave petitioner further notice that it would be unwise to further delay submitting its by now stale reimbursement claims. Thus, petitioner reasonably should have been aware well before the enactment of the 2012 amendment that its pre-2006 claims were on borrowed time, and consequently its reliance on pre~2006 law to justify its more than six-year delay in submitting them was unwarranted. This conclusion is bolstered by the more than two-month period between the January introduction of the 2012 amendment and its April effective date. Once the amendment had been introduced by the Governor, petitioner had additional notice that further delay would result in termination of its claims. As we explained above, petitioner submitted a flurry of claims during this period, and the Department paid them (R. 305, ~ 52 & n.23). Consequently, any reliance interest in overburden reimbursement that petitioner may have had by the time of the enactment of the 2012 amendment was minimal, and the Legislat11re adequately accommodated it here by prospectively barring only claims submitted after its effective date. 3. The extent of retroactivity is not excessive. There is no merit to the County's claim below that the 2012 amendment is excessively retroactive. On the contrary, the amendment is 32 prospective to the extent that it extinguished only claims that were submitted after its enactment. The Department has paid all claims that were submitted befor~ April 1, 2012. Furthermore, the 2012 amendment is a "remedial statute" that was intended to clarify that reimbursement for pre-2006 overburden claims was no longer available after the Medicaid cap regime went into effect. See Matter of Ideal Mutual Insurance Co. v. Superintendent of Insurance, 82 A.D.3d 518, 519-20 (1st Dep't 201 l) (no vested right in the statutory distribution scheme for liquidation of insurance companies, which is "subject to change at the discretion of the Legislature"). Because the Legislature intended the 2012 amendment to be curative, it is appropriately retroactive to the extent that it prospectively ended reimbursement of claims for the County's Medicaid costs that the County paid before 2006 for services, provided to overburden-eligible reCipients. As reflected in its legislative history, the purpose of the 2012 amendment was to "clarify that local governments cannot claim for overburden expenses incurred prior to January 1, 2006, when the 'local cap' statute that limited local contributions to Medicaid expenditures took effect" (R. 331). Legislative history like this indicating the purpose of clarifying legislation is probative in interpreting the prior law that is the subject of the clarification. See Held v. State of New York Workers' Compensation Board, 85 A.D.3d 35, 41 (3d Dep't) (2008 clarifying amendments to the Workers' Compensation Law 33 confirmed that Board was authorized under pre-existing law to impose assessments with respect to individual and group self-insurers), appeal dismissed, lv. denied, 17 N.Y.3d 837 (2011); see also Matter of OnBank & Trust Co., 90 N.Y.2d 725, 731 (1997). The County argued below that the 2012 amendment is not a clarifying. amendment because both this Court and the Third Department have held that the original Cap Statute did not extinguish pre-2006 overburden liabilities. But as its legislative history makes clear, the 2012 amendment was a remedial response to "adverse court decisions that have resulted in State costs paid to local districts for pre-cap periods, which conflict with the original intent of the local cap statute" (R. 331). In enacting the 2012 amendment, the Legislature made clear that the Medicaid cost-allocation system that the Cap Statute implemented was meant to exclude overburden reimbursement. The Legislature recognized that continued State payment of pre-2006 overburden claims would defeat one of the key requirements of the new cost allocation system: that each County pay its !fiandated cap amount toward Medicaid expenditures. However, the Legislature did not seek to reverse the effect of this · Court's decisions regarding claims submitted between 2006 and April 1, 2012. In precluding payment of old overburden claims after April 1, 2012, the Legislature properly clarified, on a prospective basis, the correct allocation of 34 fiscal responsibility between counties and the State under the Cap Statute. The 2012 amendment is thus not excessively retroactive. 4. The 2012 Amendment serves an important public interest. By foreclosing payment of stale overburden liabilities now as much as · 29 years old, the 2012 amendment provides the State with needed closure · and repose, especially during an extreme fiscal crisis. Unlike Alliance of American Insitrers v. Chu, 77 N.Y.2d at 586, where the challenged statute affected the rights of private corporations, here the State has amended its statutory reimbursement obligations to its political subdivisions, which it created to assist it in the provision of public services. See City of New York v. State of New York, 86 N.Y.2d at 290. In this regard, the County misses the mark in arguing that.the State has converted County funds. The overburden funds that have not been paid to the counties have been used for other governmental purposes, not to enrich private individuals. As far as due process is concerned, the Legislature retains sole discretion regarding how to allocate the costs of governmental programs between the State and the counties, including the County. In sum, in the 2012 amendment to the Cap Statute, the Legislature clarified the allocation of fiscal responsibility between the State and its political subdivisions for Medicaid expenditures. The allocation of Medicaid 35 costs set forth in the Cap Statute, as amended in the 2012 amendment, reflects trade-offs that, on balance, are very much in the counties' favor. Even if a due process/vested rights analysis were appropriate here, and it is not, the 2012 amendment would be constitutional. The County's remaining claims are barred by this Court's decision in County of Niagara v. Shah. Accordingly, reversal and dismissal are warranted here. 36 CONCLUSION This Court should reverse the judgment, declare that section 61 of Part D of chapter 56 of the laws of 2012 is constitutional, and dismiss the petition/complaint. Dated: Albany, New York January 6, 2015 ANDREW D. BING Deputy Solicitor General VICTOR PALADINO Assistant Solicitor General of Counsel Respectfully submitted, ERIC T. SCHNEIDERMAN Attorney General of the State of New York At~otn~or ~ellants By:~~ VICTOR PALADINO Assistant Solicitor General Office of the Attorney General The Capitol Albany, New York 12224 Telephone: (518) 776-2012 Reproduced on Recycled Paper 37 tK ... ice he ·01• l1!l .J\ !!!! }J.:. nd ph 04 be of .ch er to , .. ~elJ !aJ ler le· Of on he ... er or ch in Uy by oh ,. 0 • I I I I I ' I 2005 REGULAR SESSION Ch. 58, Pt; C, § 1 on an emergency basis any regulation· he or ahe or· auch oouncU detenninea necel13fll'Y to imp1em.ent any provirrl.on Of thi! act on Jts. effective date; · 8. · Tho provJl!lons of this act shall bocomo erfeetive ootwithsiandlni the failure of the commlasloniw or health or the superfntandenl of lnaumnoo or any council tc adopt 01· amend or promulgate '-egulatJorl!J implementing this fl.ct; 9. The amondmento w •ubdivlsion 4 or section 26!1 or tho public heoltll law made by section oeventy of thftl net •hall not affect the expiration or uuch subdivi•lons ond shall be deemed to expire therewith; 10. The •mendmenta tc ae<1t!on 2807-i of the public health law llitlde by sect.ions forty-one, ro,.cy.f.hroo, fifty.three, and alxty·two of thftl act shall not affect the "'Plrat!on of auch oe be repealed therewith; and· . 14. The amendments to eectlon 4403-f of the pubUc health law m>de by uectiono eighty· three and elghty.fow or this act ahall not alreet the repel\I of auch section and' !lhall be deemed to be repealed therowith. Ewi of Port 8 PARTC I I. (al Not;witht!IWldlng the provl.slona of sooUon 86/HI of the &0eial semcos law, or ·any 0th.er provision of law, tho deparimont of health sbJill )lr expend!· tures made, and n1venues rocolvoo, outolde the base yew that are related to servicea provided dwing, or prior to, the basa y0/11. Such baoo year calcufationa !lholl be b.,.d on the social ..rviees district medical eas!atanco ohareu provialorw Jn etrccl on January I, 2006. (c) Commenclnj! with the ealend11r year beginning January 1, .2000, calendar year aoclal oervlees disbict medico! aaslstance expenditure amounts for e!IOh eoclal uervfces dlstrlcl shall be calculated by multiplying the re.ulto of the calculaUens porfonned pursuant lo paragraph (b) orthla section by a non-eompoundad trend factor, aa follows: (!) 2006 (Jonuary I, 2000 through December 31, 2006): 3,6%; (Ii) 2007 (January I, 2007 through O.cember 31, 2007): 6.16% (3.25% plus the prior year's . 8.5%); 315 ADDENDUM I '.,,, I. I' .}i'" ;:ill" .. : ·i J. ,<' ~ Al ' ., ' l 1. ,, l I ..... ' . ..: ' 'I. '. '!' . , ) Ch. 58, pt, C, § 1 LAWS OF NEW YORK (ill) 2008 (January l, 2008 through Derember 81, 2008): 9.75% (8% plus the prior year's 6.76%); (iv) 2009 (January l, 2(1<)!) through December 81, 2009), and each •ucUllounta calculated pul'!luant to subparagrapha (i) and (ii) or panigmph (d) of thb aeedon. (iU) During each ataw flavl0!oM In effect on JanUJll')' I, 2006 been applied to •uch district. As soon .. prectlcable Mer the concl"'!on ol e1!4h suoh fiscal year, but In no evMt lllter tl)nn •il< month• after the oonolualon or each such fialllll yeor, the oommlsalonor ahall l'OCOnclle such not amounta with auch fis' and Bh.U be .made without regard to expenditure• made, and revenues received, outaide sul!h liBcal year that are related to some .. p1~vided during, or prior to, euch llscal year, The comml1lllioner shall pay te each ll!!ttance for needy pernons, and the admilliatraUon thereof, in aceordance with the provisions o! thla eecUon • 316 Mlffli""* m ~dlcoltd by ''lllt!llfl!: dolttt1111 by ~ "IOU by ..,Olllng ADDENDUM 2006 REG (b) Nol'I contnuy:. (!) i\ ... adopt.Ion 01 of thlJJ pa? paragraph aubdlvlllfot (h) of oocU loc!ll lelli&~ be ettectlv• later Ihm oommleolo1 later than aoclal ""' services dl section. (il) Fon ne it em § one. 1 relmbUl)Je! chapter (ft ~ 2. Tl §a, Tl calendar y not taken the ba&e y ahall """"' historical ' mine/I that m'1d!<:lll " aettont1 . 14, N dlvlllon o! . district eiq or a tax rt of tho tax percenl;agl § 6. N health. is purpoaea,' me &elVll •uch prog> Uon by th• social .. ri and the dl § 6. L 6ioner oll ot the ata dlUgenoe ... perv1a10 2. sue local di.tr utll!zoUon and abuae (a) IC, l dlstricl b< A2 i ! ' ! . ! ' ' NEW YOl!K Ch. 57, Pt., A, * 60 ; PROl'ISIONS •• ernnloycd ~ .;:"" In eata6Us • n~1der tlie coa.t ,., lle(llcffllY ?rnm 1e ttin~ l' or the :.j !io at ti•¥, o i are tecnuOC:..,. · - ·.· .. 1tion re.~neu or . ':- nood o ongvln~ i'.:11;.·i tatlli .or medic~ oaveo!u or belii~ !;\: • l)iit not llffilw . ,,. 44 of pat't J ol' • .. : .. ·~ 'n pl'ogram. I.. . ; ltlli di '·~~: tnd.ng service la .. ~.-<, oes to medioiill~ , .. ·r. .. .1 economies an :·r_,~:~-~;: 1e sa.tis RC on o ~erv1<:ea to $UC 1ted pursuant tc:l md retentJon or ceo to medicalfo 1urpot:e. ·Fun a: ld•d by a local ite duty nurs.e1.ti >ner of hea.lth, a the purpose of of ~rivaw dut~ is •uthorlied to " required by Ulla ,lOBeS othel' \hlUI to d ut~ nursing I on to any othei· " ( ded by addlitJl' a .. !: J ldl119 :t· 137 '" I ADDENDUM A3 Ch. 51, Pt. A, § 60 LAWS OF NEW YORK CHAPTER cori'r.UNS VF:rOBD PROVISIONS 14 of part A il!ld. uoctlon& 13 and 14 ot part ll ol ot :<002, shaU be •xcluded t\i>111 all calctllatlon1111~de pursuan\ I<> thil te J1111uory 1, 2000: (l) by Iha departmonl of hoalth to a ;<>y portion of •u•h JlllY1'l•~tl lltllt are made on Qr before Juno I, 2006 ""d thal .. ,, al(;h (e-1) of uubdlvlilun Ill or ...UO. 2808 of the publlil health low, "" ndliod by ••ctlun llO ot pol'I C of dulpter li8 ot the lawa of 2006. I• 11mondi!d II> naq ,.. follO'Wll: l"tU Notwithiltandlng any lncotulstont provJston or lnw or l'ttllllotfon, th• com11U..lonor •hnll provld~, Ill addition Ill jlllymentll .. tabilHhed pw'llUWlt U> th!il a1tlcle prlol' to up1lllc0Uon 111 ~hi~ •e Alll<>Mt of UP to one hundred My mlllkm dnll•ra In nddlWin"1 payments for "™'1 fllic•l yenr beginning April nrot., two thOU8and IW~ yeill' aa applluble. § ;13, lntenUQn.Uy omitted, § tl4. lntimthmally 0mltt00. § 65. S..tlon 364-J ot the 110ci•I S$'VICiU not; !hi During llnl provider· being m l>equlres. t.emJ>Ora: RU ""l~ent enro doling e @Oij (I) The commil ptll')?j!I!•• and pto1 § 6&-a. Sect!o chapte1• ti3 of the I § 3117-s, Emei of law to the contr b...S. w srovlders to e.~eoo !our ml ooven Pllnluant to (a) For each m wbWnce paymw the department c processed relmbu· quarter or the !\Im (b) »or ea-b, Section other l•Wll rclaUng Rs follows: . · § w. Thi& ff~t t subdJviaion: 4 of se<' ·•hall not affect the ProvWed ful'ther ti lldditlol> A4 Ch. 56, pt. D, § 59 .... ces aw am e1 av to cauntJ.ftt , f 61-4. Section 82 of tho public h .. lth llW la amend I thla .. lmpld hiwr ~ . (k)' defeat effeotl (I): .. l'Vi~ prior' d the """"' ~~ea thereto under 2012 REGULAR SESSION Ch. 56, pt. F, § l § 6.1, This act shall take etrect immediately, and shall be deemed to have been In Ml foree and eflect on and al\er April I, 2012, provided, however, that: · (a) the commlsaloner of health may promulgate emergency regulation• newisary to etrectuato the prov!lllon& of se!or w Ito etrective date; (m) provided, further, that notwithstanding any lnconalswnt prevision of the state admlnie· ; · 1:1:.'.\l"• procedure act or any other provlalon of law, rule or regulation, the commlaoloner of c:• """'th and the superintendent of Unancial services and any approprlato council is authorized ation, the effedl'l'O' ·flt!on 18 of cha!')!· :;, ... ·-ell determines nec088al'y to Implement any provision or tlrlB act on Ito eflectlve date; and frames for no- : '.' ·,. '. :,; • (n) pl'O'/lded, further, that the provlBJIJJlS of thla acl shall become etl'eetive notwithstanding d without force.~ ;,,;:,'.',the failure of the commlll8loner of health or the superintendent of finane!Bl aervloea or any ; ;:::,:. """1cil to adopt or.emend or promulgate regulaUona !mplementlng tlrlB &cl. .ton, section or;::: · ( ': ' · ~wt~~' ~~:~~{;l· el'tor 645 of .ts, n~es. rovided on Ulnr.ss and Jpt!on and 1Qther&py; J and rou- iontla but idlng eye- th, alcohol with the lurf!ll and ~or use bj, :.C of the r supplles ming both ling a new 1 made on othe?Wlliii 1mount 1i1i nt for .e a.veme tiustroehts mdlng i.he ienilitur"8 .a followa: ' failed "' !itlOR and dellnea or 1poso such ~ oerv!<:ea auceetUJot ipar1:rl; :>reviou unount o I dJatrlct16 Mia .uJi . JO'IW!i ;a Written ~ 1ereUon OI , .. "'¥f!Y. ~ iiilitil•tiiil ndlng the ~ndit11/# ZOIO REGULAR SESSION Ch. 109, Pt. B, § 27 ., made by social service• dlotricts for medical wmtitnce, as amended by section 62 of pol't C of chapter 68 of the 1"wo ot 2007, fa amended I<> .....i .. follow.: (!) Subje piragniph (g) of this sootion, the stare ftacal year aoclal services district expenditure cap amount calculatsd for each social aervies• district punuant I<> paragraph (d) o1 Uds ,..cion shall be allotte expendi· turu made, and revenues recol'6d, outalde the base year that are related to services provided ~ming, or prior w, the b .. e year. Such bm year calculaUons shall be based on the socl~l sel'vlcea district medfl!lll assist.nee shares provl•lons In etreot on January 1, 2005. Sull!OCI \Q Ille rovialons o subdivision four of sectlon six of thla arl the sta ocal social BefVi re ve n es o e non·fe a m o m usistance tu:r s nor to anu l not au ect a ustment on an r ul l § ~. Not;withslal1dlng any Inconsistent provlalon ot aectlon 112 or 168 of the etate finance ·• law or any other contracy provision of the stare tlmules law or any other con\;t'&ey provlB!on of ' " ' I.aw, the c:ommlsaloner of health ml\)', without a competitive bid or requeat for proposal ., procoaa, enter int<> oontracta With one or more certitlod public accounting ftnns for the putpose of conducting audits of dlaproportionale ah""' hoapital payments made by the state -'' of New York to general hoopltsls and for the purpooe of conducting audits of hoapital cost i. report.I BB aubmltted to the state of New.York In occordancs with article 28 of the public health law. I 26. Subdivision 7"8 of ...Uon 101 of p8l't A of chaprer 57 of the lawa of 2006, amending ':; . the soclal servilll!B law rel•tlng to medlcslly fragi)e cltlldren, .. amended by section 65 of part ... c or chapU!r 68 or the lawa of 2008, la amended to !WI .. follOWll; '' ["'• 7-a. Seetions My-do""1 llledl""1 "'uialanoo po .. ontngo •Rd i.'i;"'"l>I•~ to ..,t;ona 1933 and l~lO)!E)(I<) ot tJio tollul'lll ooolol eeo...;1y ..i, medl