In the Matter of County of Oneida, Appellant,v.Nirav R. Shah,, et al., Respondents.BriefN.Y.September 7, 2016 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 .... , ....... , .. , ....................................... ,, ....................................................... 7 Section 61 of the 2012 Executive Budget Law .......................................................................... 10 Recent Overburden Claims Submitted .................................................. ~ .................................. 11 The Supren1e Court Judgment .... , ..... , ......................................................................................... 11 ARGUMENT ...................................................................... , ........ ,.t ..•.•••••.••••••••••••••••••••••••••••••••••••• 11 POINT I - PETITIONER HAS CAPACITY TO CHALLENGE SECTION 61 .......... ; ....... 11 A. Respondents Challenge Petitioner's Capacity to Bring this Proceeding ................... 13 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 ............................................................................................. 19 A. This Court Should Adopt the Third Department's Interpretation of Section 61 ..... 19 B. Respondents' Interpretation of Section 61 Violates General Construction Law § 93 ................ , ................................................................................... , ......................... , ..... 24 POINT III - 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 Rein1bursement ························································~································,··············· 26 1 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 ....................................... 3 5 4. The Public Interest Requires Reimbursement of the Improperly Retained Overburden Payments to Petitioner .................................................................. 38 POINT IV - SUPREME COURT PROPERLY COMPELLED RESPONDENTS TO REIMBURSE PETITIONER PURSUANT TO SOCIAL SERVICES LAW§ 368-A ..................................................... , .................................................... 39 CONCLUSION ........................................ , ........................................................... , ................ , .. , .... 41 ii TABLE OF AUTHORITIES State Cases Alliance of Am. Insurers v Chu, 77 NY2d 573 (1991) ............................................................ 25, 26 Alweis v Evans, 69 NY2d 199 (1987) ..................................................................................... 19, 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 York v Lawton, 128 AD2d 202 (3d Dept 1987) .................................................. 15, 16 City of New York v State of New York, 86 NY2d 286 (1995) ................................................ passim County of Rensselaer v Regan, 173 AD2d 3 7 (3d Dept 1991), ajf d 80 NY2d 988 ( 1992) .... 14, 18 Dorfman v Leidner, 76 NY2d 956 (1990) .................................................................................... 35 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) ..................................................................... 15, 16 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) .................................................. , ............................................................. 15 James Sq. Assoc. LP v Mullen, 91AD3d164 (4th Dept 2011), qffd 21NY3d233 (2013) ......... 27 James Sq. Assoc. LP v Mullen, 21NY3d233 (2013) ................................................. 26, 27, 29, 38 Jeter v Ellenville Cent. School Dist., 41 NY2d 283 (1977) .............................................. 14, 15, 17 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) ............................................................................................. 19 Matter o/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) ....................... ,t.~ ....................................................................................... 19 Matter of County of Cayuga v Mc!-!ugh, 4 NY2d 609 (1958) ...................................................... 14 Matter of County of Erie v Daines, 83 AD3d 1506 (4th Dept 2011) .............................................. 9 Matter of County of Erie v Daines, 96 AD3d 1432 (4th Dept 2012) .............................................. 9 Matter of County of Fulton v State of New York, 76 NY2d 675 (1990) ....................................... 40 Matter of County of Herkimer v Daines, 60 AD3d 1456 (4th Dept 2009), lv denied 13 NY.3d 707 (2009) .......................................................................................................... passim Matter of County o.f Herkimer v Daines, 83 AD3d 1510 (4th Dept 2011) ..................................... 9 Matter of County of Nassau v State of New York, 100 AD3d 1052 (3d Dept 2012), lv dismissed20 NY3d 1092 (2013) ........................................................................................... 15 Matter of County of Niagara v Daines, Sup Ct, Niagara County, Kloch, Sr., J., Feb. 18, 2010, Index No. 137680 .............................................. , .. , .. , ................. , ..... ,.~··1······················· .. ············· 10 Matter of County of Niagara v Daines, 79AD3d1702 (4th Dept 2010), lv denied 82 AD3d 1719 (4th Dept 2011), lv denied 17 NY3d 703 (2011) ........................................... 7, 9 Matter of County of Niagara v Daines, 91AD3d1288 (4th Dept 2012), Iv denied 94 AD3d 1481 (4th Dept 2012) .......................................................................... 9, 21, 26, 27, 33 Matter of County of Niagara v Shah, 122 AD3d 1239 (4th Dept Nov. 14, 2014) .................... 2, 21 Matter of County of St. Lawrence v Daines, 81AD3d212 (3d Dept 2011), lv denied 17 NY3d 703 (2011) .......................................................................................................... passim Matter of County of St~ Lawrence v Shah,_ AD3d _, 2014 NY Slip Op 08278 (3dDeptNov. 26, 2014) .................................................................................................... passim Matter of County of St. Lawrence v Shah, 95 AD3d 1548 (3d Dept 2012) .......... 4, 9 24, 25, 26 28 Matter o.fCrespo, 123 Misc 2d 862 (Sup Ct, New York County 1984) ....................................... 16 iv Matter of Graziano v County of Albany, 3 NY3d 475 (2004) ...................................................... 13 Matter of Hodes v Axelrod, 70 NY2d 364 (1987) ........................................................................ 26 Matter of Island Waste Servs., Ltd. v Tax Appeals Trib. of State of N. Y., 77 AD3d I 080 (3d Dept 2010), lv denied 16 NY3d 712 (2011) ....................................................................... 37 Matter of Krauskopfv 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 Ttfj'any, 179 NY 455 (1904) ........................................................................................... 19 Matter of Town of Moreau v County of Saratoga, 142 AD2d 864 (3d Dept 1988) ...................... 14 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) t••••1111•111111111111111t1I1•1tt Ill •t lfflltt I ttlti I lllf 1t11111•1t1t11111111111111111111l1t1t tlllllf ltft41tf>•ttll ttt1t1111•1- tlllllllltl 19 Purcell v Regan, 126 AD2d 849 (3d Dept 1987), lv denied 69 NY2d 613 (1987) ....................... 15 RingvJones, 13AD3d1078 (4thDept2004) .............................................................................. 17 Rivera v Laporte, 120 Misc 2d 733 (Sup Ct, New York County 1983) ....................................... 16 Roman Catholic Diocese of Albany, N.Y. v New York State Workers' Compensation Bd., 96 AD3d 1288 (3d Dept 2012) ................................................................................................. 23 Stiver v Good & Fair Carting & Moving, Inc., 32 AD3d 1209 (4th Dept 2006), affd 9 NY3d 253 (2007) ....................... , ...................................................... ~ ..... , ................................. 17 Town of Delhi v Telian, 119 AD3d 1049 (3d Dept 2014) ............................................................ 16 v Village of Herkimer v Axelrod, 58 NY2d I 069 (1983) ................................................................. 15 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) .............................. 16 Statutes, Constitutional Provisions & Regulations 18 NYCRR § 601.3 ...................................... , .. , ............................................. ~·······•'"•I••····················· 7 CPLR 321 l(a)(3), € ...................................................................................................................... 16 General Construction Law§ 93 ........ , ....................... , .. , .................... , ...... ,., .. , ............................... , 24 L 2005, ch 58, part C, § l(c) ......................................................................................................... 36 L 2005, ch 58, part C, § 1 ..................................... , .................... ; ............ ~ ............. ,., ............... , .. ,~ ... 6 L 2010, ch 109, part B, § 24 lt••·······················,····························•t••·····································,·····,··· 8 L 2010, ch 109, part B, § 40(c) ..................................................................................................... 27 L 2011, ch 59, part I-I,§ 92(1) ....................................................................................................... 41 L 2012, ch 56, part D, § 65(k) ................................................................................................. 21, 27 Social Services Law§ 368-a .................................................................................................. passim Social Services Law§ 368-a(l)(h) ..................................................................................... 1, 28, 41 Social Services Law§ 368-a(l)(h)(i) ................................................................................ 20, 33, 39 Other Authorities Menfam-Webster's Collegiate Dictionary, at 228 (11th ed 2004) ............................................... 35 vi COUNTERSTATEMENT OF QUESTIONS PRESENTED 1. Did Supreme Court, Oneida County (Clark, J.), properly declare Section 61 of Part D of Chapter 56 of the Laws of 2012 ("Section 61 ") m1constitutional? Supreme Court properly held that Section 61 retroactively impaired Petitioner's vested right to reimbursement for the overburden expenses that it incurred on Respondents' pehalf prior to January 1, 2006 pursuant to Social Services Law§ 368-a and was therefore unconstitutional. 2. Did Supreme Court, Oneida County properly compel Respondents to calculate and reimburse Petitioner for the total remaining overburden expenses that it incurred on Respondents' behalf prior to January 1, 2006 in accordance with the clear statutory mandates of Social Services Law § 368-a(l )(h)? Supreme Court properly granted Petitioner's request for mandamus relief compelling Respondents to calculate and reimburse Petitioner for the total remaining overburden expenses that it incurred on Respondents' behalf prior to January 1, 2006 in accordance with Social Services Law § 368-a. PRELIMINARY STATEMENT Petitioner County of Oneida ("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, HRespondents'') from the Decision and Order of Supreme Court, Oneida County (Clark, J.), dated February 28, 2014 and entered March 14, 2014, declaring Section 61 of the 2012 Executive Budget unconstitutional, annulling the determination of Respondents to deny Petitioner's claims for overburden reimbmsement, directing Respondents to pay Petitioner's claims in the total amount of $3,123,878.56, and compelling Respondents to calculate and pay Petitioner for the total remaining overburden reimbursements owed. The reimbursement sought in this proceeding is for Medicaid local share payments made by Petitioner commonly known as Hoverburden" 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 L AD3d _, 2014 NY Slip Op 08278 [3d Dept Nov. 26, 2014] ["St. Lawrence III"]). 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), and Matter of County of Genesee v Shah (Appeal No. CA 14-01041\ and before the Third Department in Matter of County o.fChemung v Shah (Appeal No. 518222). This Court should follow the Third Department's decision in St. Lawrence III. In St. Lawrence III, the Third Department reaffinned that Petitioner acquired 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, extinguished 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 rnn for a reasonable period after the effective date of the statute. Thus, in declaring Section 61 constitutional, the Third Department 2 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, numing from November 26, 2014. The Third Department's recent decision in St. Lawrence !!!is a well-reasoned, well-supported resolution of the issues in the appeals between the counties and Respondents, is fully consistent with this Court's recent decision in County of Niagara and addresses 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 exptessly rejected Respondents' two main arguments on this appeal: (1) that Petitioner lacks the right to challenge Section 61 and (2) that Supreme Court overreached in granting Petitioner mandamus relief compelling Respondents to identify, verify, and pay the total unpaid overburden expenditures that Petitioner incurred prior to January I, 2006. Distilled to its essence, Respondents' first argument challenges Petitioner's capacity, as a municipality, to seek to invalidate State legislation. Respondents, however, waived this argument 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 Krauskopfv Perales (139 AD2d 147 [3d Dept 1988]), Respondents' admissions in this proceeding, and the Third Department's decision in St. Lawrence III, 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. 3 Respondents' second argument similarly fails. As the Third Department held, Social Services Law § 368-a, which was not explicitly or implicitly repealed by Section 61, contains a mandatory and ministerial statutory duty requiring Respondents to reimburse Petitioner for 100 percent of the overburden expenditures it made before January l, 2006. Indeed, the Third Department, in Matter of County of St. Lawrence v Shah (95 AD3d 1548 [3d Dept 2012] ["St. Lawrence II"]), unequivocally detem1ined that Respondents cannot retroactively extinguish their overburden reimbursement duty to Petitioner, and reaffirmed that holding in St. Lawrence III. Thus, contrary to Respondents' argument, Supreme Court properly compelled Respondents to calculate and pay all unpaid overburden reimbursement owed to Petitioner in accordance with Social Services Law § 368-a. 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 decision in St. Lawrence III. COUNTERSTATEMENT OF FACTS New York's Medical Assistance program makes Petitioner, and other counties throughout the state, responsible for providing Medical Assistance to eligible patients (Record on Appeal e'R"] 30-31). 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 31). 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 32). As part of this fiscal relief eriactment, the Legislature amended Social 4 Services Law § 368-a to add subdivision (1 )(h), which provides counties with full reimbursement for their local shares for this category of Medical Assistance recipients, known 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, 81 AD3d 212, 218 [3d Dept 2011] ["St. Lawrence I"], Iv denied 17 NY3d 703 [20111). 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 account maintained by the State Comptroller (R 344a). 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 648-650, 654-661). Respondents admit that they, not Petitioner, were responsible for identifying and coding the overburden individuals (R 345). 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 345-347, 655, 657-660, 665-666). 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 reports and other data that Respondents purportedly provided to Petitioner (Brief for Appellants ["Resps' Br."], at 5-6). 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 5 Petitioner that certain individuals either had not been properly coded or had been decoded (R 346-349, 365, 658-700). 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 662), and have abjectly refused to turn over other relevant documents (R 126-181, 661-662). Absent Respondents' identification of the uncoded individuals and disclosure of the relevant records, it was impossible for Petitioner and the counties to identify the unpaid overburden reimbursement (R 657-659). 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 and Disability Assistance (''OTDN') to suspend any and all processing or payment of overburden reimbursements to the counties (R 34, 650). Thus, even if Petitioner 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 650~652, 667-671, 842~845). The Medicaid Cap Statute In 2005, the Legislature ~dopted 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 6 use 2005 as a base year for a county's total Medical Assistance expenditures, and to then guarantee that future expenditures did not increase unreasonably above that amount (see id § 1 [b ]-[ d]). Notably, the Medicaid Cap Statute incorporated the overburden reimbursement obligation prospectively, effective January 1, 2006, while leaving it unchanged retrospectively (R 61). As such, after adoption of the Medicaid Cap, Respondents remained liable to reimbul'se 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 62-63). In those litigations, Respondents initially argued that the counties' claims for overburden reimbursement were barred by the Medicaid Cap Statute (R 62). 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 Coutt' 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 argun1ents, 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 7 made, and the Third Department rejected, the identical argument as presented in this appeal; nan1ely, Petitioner should have submitted the otherwise "stale'' reimbursement claims earlier based upon the limited proforma statistical repo1is allegedly provided by Respondents (compare R 347-349 with R 605-607). 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 expenditures incurred prior to January l, 2006 shall not be subject to adjustment on and after July 1, 2006" (L 2010, ch 109, part 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 64). In or around 2010, the counties again submitted overburden reimbursement claims to Respondents (R 64-65). Respondents denied those reimbursement claims, this time on the basis that the 2010 Amendment extinguished the counties' right to reimbursement (id). 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 satisfy its obligations under this statute. Since the state was never entitled to these funds, the 20 I 0 amendment, even if found to apply to overburden expenditures, cannot serve to transform these county funds 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 8 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 J, 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 [3dDeptMay 17, 2012]) (R431, 670-673). 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 County of Erie v Daines, 83 AD3d 1506 [4th Dept 2011]; Matter of County of St. Lawrence v Daines, 81AD3d212 [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 o.f 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 taken 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, 9 Kloch, Sr., J., Feb. 18, 2010, Index No. 137680) (R 657-660). 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 506-509). 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 11 that Respondents could not do so (R 36-37). 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 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 1, 2012 (Resps' Br., at 10; see also R 299, 354-355). At the time Section 61 was introduced, therefore, Respondents still were rejecting overburden claims based upon the 2010 Amendment (R 354-355, 431-432). Respondents' suggestion that they voluntarily paid overburden claims between the introduction of Section 61 and its enactment, a purpotied due process grace period (Resps' Br., at 11, 27-28), therefore, is patently false (R 431, 670-673, 430-432). Thus, no grace or limitations period was afforded to the counties to allow them to identify and seek unpaid overburden reimbursement (R 38). 10 Recent Overburden Claims Submitted On or about May 28, 2013 and July 23, 2013, Petitioner submitted claims for overburden reimbursement to Respondents in the total amount of $3,123,878.56 (R 318-328). By form letter, Respondents denied those claims in their entirety, based solely on the retroactive application of Section 61 (R 330-331). Thus, Respondents' actions once again left Petitioner with no alternative but to challenge the deprivation of its reimbursement rights in the courts. The Sunreme Court Judgment On February 28, 2014, Supreme Comt, Oneida County (Clark, J.) issued a Decision and Order declaring Section 61 of the 2012 Executive Budget unconstitutional, annulling the determination of Respondents to deny Petitioner's claims for overburden reimbursement, directing Respondents to pay Petitioner's claims in the total amount of $3,123,878.56, and granting Petitioner's request for .mandamus relief compelling Respondents to calculate and pay Petitioner for the total remaining overburden reimbursements owed (R 11-16). Respondents appealed from the Supreme Court order (R 5-7). ARGUMENT POINT I PETITIONER HAS CAPACITY 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 overbm·den reimbursement owed under Social Services Law§ 368~a, which they claim has been repealed by implication (Resps' Br., at 14-18). 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 & 11 Lawrence III explicitly confinned 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, 2014 NY Slip Op 08278, at *2). 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 conceded that if the issue is one of capacity, Petitioner's claims are not barred. (Resps' Br., at 17). 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 impennissibly 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 and unpreserved argument that Petitioner lacks capacity to challenge the unconstitutional deprivation of its vested and due process rights, as did the Third Department. 12 A. Respondents Challenge Petitioner's Capacity to Bring this Proceeding. Respondents contend that Petitioner's due process and vested rights claims fail because Petitioner, as a political subdivision of the State, can never assert a due process or vested rights claim against the State (Resps' Br., at 14~ 18). 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 an 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 and other local governmental corporate entities and their officers lack capacity to mount constitutional challenges to acts of the State and State legislation" (City of New York v State of New York, 86 NY2d 286, 289 [1995] [emphasis added]). Capacity, however, is a threshold issue that "concerns a litiganf 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 l 7 NY3d 947 [2011], lv 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, 13 40 [3d Dept 1991], affd 80 NY2d 988 [1992]; Matter of Town of 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 17-18, citing Jeter, 41 NY2d at 287) cites the same line of cases, all of which note the distinction between a municipality's govemmental 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 prope1ty 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 14 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 Herldmer 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 claim]). That Respondents are, in fact, raising capacity was most recently affirmed by the Third Department in Matter of County of Nassau v State of New York (100 AD3d 1052 [3d Dept 2012], Iv dismissed 20 NY3d 1092 [2013]). There, the Third Department held that the Cotmty lacked the legal capacity to challenge the constitutionality of a statute because "municipal entities 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 1054M1055 [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 rnle 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 (see Resps' Br., at 16-18). For example, in Purcell v Regan (126 AD2d 849 [3d Dept 1987], Iv denied 69 NY2d 613 [1987]), the Third Department held that the County of Nassau 15 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 New York v Lawton (128 AJ:?2d 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. 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 3211 [a][3], [e]; City of New York v State of New York, 86 NY2d at 292; see also Town of Delhi v Teltan, 119 AD3d 1049, 1050 [3d Dept 2014]; Andrews, Pusateri, Brandt, Shoemaker & Roberson, P.C. v Niagara County Sewer Dist. No. 1, 71 AD3d 1374, 1375 [4th Dept 2010]). Here, Respondents failed to plead lack of capacity in their Verified Answer (R 336). Thus, Respondents have waived theil' lack of capacity argument, and this Court should decline to consider it (see Town of 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, 16 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 msubstantive right to raise' a due process challenge'' (Resps' Br., at 17, quoting Jeter, 41 NY2d at 287). The Court's reference in Jeter to the "substantive dght" 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. Lawrence III, Respondents' 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], affd 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 Court 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 cannot 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 17 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], affd 80 NY2d 988 (1992]). In County of Rensselaer, the Third Department notably held that the counties had capacity to sue "because they [were] asserting a proprietary claim of entitlement to a specific fund, namely, their entitlement to receive all of the fines, forfeitures 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 344a). It is in that specific fund in which 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 Krauskopf v 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 Depaiiment'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, and Respondents concede as much. (Resps' Br., at 17). This Comt should thus follow the Third Department's guidance and reject Respondents' challenge to Petitioner's capacity. 18 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 contrary intent is clearly expressed by the Legislature." (internal quotation marks omitted)]; St. Lawrence II, 95 AD3d at 1552). Indeed,. "[t]he repeal of a statute by implication is not favored by law, for when 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 construction should be adoptedH (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 harmoniously to effectuate the purposes of each. 19 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 obligation to return them" (emphasis added)]; St. Lawrence I, 81 AD3d at 216 ['~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" (emphasis added)]). Section 61 does not explicitly or implicitly repeal any part of Social Services Law § 368w 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 r,epealed _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, 2014 NY Slip Op 08278, at *2 ["The 20 2012 amendment did not specifically repeal any patt 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 21- 22). 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 rights, obligations, duties or interests accrued, incurred or conferred 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, 51 AD3d 125, 131 [4th Dept 2008] ["the rules of statutory construction require that we avoid rendering statutory language superfluous"], Iv denied 52 AD3d 1293 [4th Dept 2008]). The Third Depmtmenfs 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 111, in County of Niagara v Shah, this Court held that "section 61 has 21 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 Couri rejected Supreme Court, Niagara County's interpretation of Section 61 because it would have nullified the Legislature's intended effect. 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 Department's, to construe Section 61 in the only manner that will preserve its constitutionality, as imposing a final limitations period for the recovery of 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 of a statute is susceptible of two constructions, the [courts] will adopt that which avoids injustice, hardship, constitutional doubts 01· other objectionable results."]). As the Third Depaiiment 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' 22 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, N.Y. 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 reimbursement immediately when it became effective, without any grace period at all. Because Section 61 did not provide a grace period for tl1e final submission of overburden reimbursement claims, the Third Department exercised its discretion and determined that a six- month limitations period rmming from the date of its decision - November 26, 2014 - was warranted 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 the retrospective application of the new statute by interpreting it as authorizing suits upon otherwise time-ban·ed 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 23 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. 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 1553wl554). This is especially true here, where Respondents assert that Section 61 effectively repeals Social Services Law § 368wa'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 effecf']; St. Lawrence II, 95 AD3d at 1553K1554; St. Lawrence I, 81 AD3d at 216; County of Herldmer 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 because Respondents argue that Section 61 repeals the entire reimbursement obligation contained in Social Services Law § 368~a by implication. It cam1ot be disputed that Respondents' interpretation of Section 61, if adopted, would have wideKranging repercussions on 24 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 354-355). This Court can avoid that impermissible result, and satisfy the directive of General Construction Law § 93, however, by adopting the Third Depmiment'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 Ill, 2014 NY Slip Op 08278, at *2-3; 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 overburden reimbursement retroactively because the balance of factors articulated by the Court 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 25 (Resps' Br., at 20). Respondents are mistaken. As the Third Department expressly cautioned in St. Lawrence II, Petitioners' vested rights to reimbursement cannot 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 take the same position here that they did in the prior cases before this Court and the Third Department- 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, cannot 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 last year, "[f]or centuries our law has harbored a singular distrust of retroactive statutes'' (James Sq. Assoc. LP v Mullen, 21 NY3d 233, 246 [2013] [internal· quotation marks and citation omitted]). Respondents do not dispute that the Legislature's authority to enact retroactive laws is substantially constrained ~~ee 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 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 26 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 Court 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, part 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" (pt. Lawrence I, 81 AD3d at 216 [emphasis added]). This Court relied on St. Lawrence !when it held that the State's retroactive application of an amendment to the Empire Zone Act violated the plaintiff's due process fights (see James Sq. Assoc. LP v Mullen, 91 AD3d 164, 172 [4th Dept 2011], affd 21 NY3d 233 [2013]). Thus, at a minimum, this Court has interpreted St. Lawrence I 27 as establishing a county's constitutionally protected right in pre-2006 overburden reimbursement (see People v ME., 121 AD3d 157, 160 [4th Dept 2014] [citing Matter of County of Herkimer v Daines (60 AD3d 1456, 1457 [4th Dept 2009], lv denied 13 NY3d 707 [2009]) in discussion regarding 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 purpo1is 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 1nust fail (see id). Additionally, numerous courts throughout the State have recently held just that, including the Supreme Courts in Broome County, Cayuga County, Chautauqua County, Chemung County, Delaware County, Genesee County, Jefferson County, Monroe County, Orleans County, Schuyler County, and St. Lawrence County (see Addendum). 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 number of insurance companies, trade associations, and individual insurance policy holders-of their constitutionally protected "property rights" in the earnings of a statutorily-created Property and Liability Insurance Security Fund to which they had previously contributed (77 NY2d at 577-578). Specifically, the Court held that, with respect to "contributions already made," the State could not extinguish the contributors' prope1iy rights 28 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 unknowable" liability themselves (R 342, 357, 359); (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 351-353); (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 courts, including 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 29 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 21-31 ). 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 taken some action - 2006 to 2012 - Respondents did not voluntarily pay a single overburden reimbursement claim (R 670-673, 431-432). During the same six year period, despite being made aware of the improper coding on their computer system, they did not~ing 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 442-443, 653-660). 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], infra). Respondents' pre-2006 obligations to Petitioner remain governed by Social Services Law§ 368-a-a statute that was adopted in 1984 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 30 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 659-661, 664-666). 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 problem. 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 23~24). 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 no proof in the record to support Respondents' contention that Petitioner and other counties "lobbied vigorously against the 2012 amendment" (Resps' Br., at 25). Second, Respondents' contention that, in a two and a half~month period between introduction and enactment, Petitioner 31 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 27-28), wholly ignores Respondents' (1) own contention that these reimbursements are purportedly "unknown and unknowable'' (R 342); (2) repeated complaints regarding the burdens of calculating these amounts (R 357); (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' unsupported 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 21-22), 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, 2014 NY Slip Op 08278, at *4 ["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 reimbursement in the first place (R 481~482, 639-640, 657-659). 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. 32 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 swom to December 3, 2009 (the "Meister Affidavit") (R 598-616). When the Meister Affidavit (R 605-607) is compared to the Affidavit of Robert LoCicero sworn to September 26, 2013 and submitted in the instant proceeding (the "LoCicero Affidavit") (R 347~349), it is clear that Respondents' argument in this proceeding as to the counties' purported ability to identify unreimbursed 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 Department (see & Lawrence II, 95 AD3d at 1553; County of Niagara 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 "ample forewarning that its claims might be extinguished" (Resps' Br., at 26) is meritless. In any event, it would not have been reasonable at any time for Petitioner to expect that the State, after taking the overburden local share payments, would simply refuse to pay its 33 creditors. The State lacks the authority to simply abrogate its own debts whenever it detennines 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 courts 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 356). Respondents admit, instead, that it was their responsibility to "identify] those Medicaid recipients who were mentally disabled under the applicable overburden criteria" (R 345, 356, 372). 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 356-358). 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 opportunity to submit reimbursement claims (R 650, 661-662). Simply stated, Petitioner's actions or inactions since 2006 are inelevant. Since 2005, there has not been a single instance when Respondents paid an overburden reimbursement claim 34 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 Retroactivity is Excessive. Respondents assert that Section 61 is a prospective amendment because it bars claims submitted after April 1, 2012. This atgument 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 farback as 1984 (R 354, 357). 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 statute, 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 January 1, 2006 (Resps' Br .• at 28-30). 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 make understandable'')). The Legislature cannot "clarify" that, contrary to the holdings of this Cou1t and the Third Department, 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 January 1, 2006 forward (see Dorfman v 35 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, part C, § l[c] "[c]ommencing with the calendar year beginning January 1, 2006, calendar year social services district medical assistance expenditure amounts 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 courts 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 noti and cannot, point to any language or legislative history of the Medicaid 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 150i 154-155 [1984] [after reviewing the legislative history, and finding an "absence of clear legislative indication that the statute be applied 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 c01TeCt (which it is not), Respondents' position still fails. 36 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 caru1ot 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 an1endment (which, again, it is not), Section 61 would overturn this Court's precedent, and the precedent of numerous comts 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 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 37 ~ ; '.! 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 30-31). There is no authority in support of this purported interest because it is not the type of overriding 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 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 38 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 unconstitutional and affirm the Supreme Court order. POINT IV SUPREME COURT PROPERLY COMPELLED RESPONDENTS TO REIMBURSE PETITIONER PURSUANT TO SOCIAL SERVICES LAW § 368tiA Supreme Court properly granted mandamus compelling Respondents to finally satisfy their unilateral reimbursement duty under Social Services Law § 368~a. Notwithstanding Respondents' characterization of Supreme Court's direction, the judgment does not compel Respondents to undertake any specific method for satisfying their statutory reimbursement obligation, nor does it compel Respondents to establish a particular amount owed to Petitioner or to reach a specific conclusion. It simply requires Respondents to forgo any further dilatory tactics, fulfill their statutory duty, and resolve the outstanding overburden reimbursement liability to Petitioner once and for all. The Third Department recently affirmed the grant of this relief in St. Lawrence III. Respondents' argument that the method by which DOH determines overburden reimbursement involves the exercise of discretion misconstrues the process. Respondents' obligation to detennine overburden eligibility prior to paying Petitioner's claims is in no way discretionary. Instead, according to DOI-l's own Medicaid Reference Guide Manual, Respondents must find that an individual is overburden-eligible if he or she meets one of four specifically defined criteria (R 539-540). Simply put, once the factual predicate for overburden eligibility . is established as provided under the Medicaid Reference Guide Manual, reimbursement is necessary and Respondents have absolutely no discretion to avoid it (see Social 39 Services Law § 368-a[l][h][i] ["(t)here shall be paid to each such district ... " (emphasis added)]; see also Matter of County of Fulton v State of New York, 76 NY2d 675, 678 [1990] [granting mandamus to compel payment of assessments where statute expressly provided that assessments "shall be paid by the river regulating district"]). Indeed, as the Third Department held, Petitioner asserts that it was entitled to a writ of mandamus to compel DOH to comply with the mandate of Social Services Law § 368-a (1 ), which states that DOH "shall" reimburse petitioner for, among other things, overburden expenditures; the statute does not include any requirement that petitioner make a claim for those payments. Thus, DOH was required to pay those reimbursements even without any claims being made, and should have done so by 2006. This Court has already determined that the state cannot be relieved of its obligation to refund the counties for overburden expenditures made prior to January 1, 2006. As DOH's statutory obligation to make reimbursement for these expenditures is mandatory and ministerial and does not involve any discretion, petitioner was entitled to a writ of mandamus requiring DOH to review its records to identify any individuals who may not have been properly coded as overburden patients, and all medical services that were provided to individuals who were or were not properly coded as overburden patients, then process all pre-2006 overburden expenditure reimbursements to petitioner (St. Lawrence III, 2014 NY Slip Op 08278, at *3 [citation omitted]). Because Social Services Law § 368~a has not been repealed, and Section 61 may only be constrned as a statute of limitations extinguishing the remedy to recover overburden reimbursement, but not the underlying statutory right (see St. Lawrence III, 2014 NY Slip Op 08278, at *3 ["we have herewith determined that the amendment did not extinguish petitioner1s substantive right to reimbursement; the amendment only prevents petitioner from obtaining any remedy in relation to that right after a certain date"]), Supreme Court's grant of mandamus relief compelling Respondents to identify, verify, and pay the total unpaid overburden expenditures that Petitioner incuned prior to 2006 was proper. Finally, in order to convince this Court that their statutory reimbursement duty is far too burdensome to complete, Respondents assert that payment of the State's undisputed overburden 40 :i ,, reimbursement debt to Petitioner "could cause the Medicaid program to exceed the global spending cap on state Medicaid expenditures/' which could have impacts on Medicaid providers and recipients (Resps' Br., at 36). This last gasp policy argument cannot have any legal impact on Petitioner's clear entitlement to the mandamus relief ordered by Supreme Court, and, in any event, is wholly without merit. As Respondents acknowledge, the global spending cap on state Medicaid expenses is a ceiling that is placed on the total amount of Medicaid expenditures for services provided to Medicaid-eligible recipients that the State may incur during a given fiscal year (see L 2011, ch 59, part H, § 92[1]). The overburden reimbursement liability owed to Petitioner derives from expenditures for services that were performed prior to January 1, 2006 (see Social Services Law § 368-a[l ][h]) and, therefore, payment of the reimbursements will not in any way cause the Medicaid program to exceed the global spending cap in the current fiscal year, as Respondents suggest. CONCLUSION For the foregoing reasons, Petitioner respectfully requests that this Court modify the Order of Supreme Court, Oneida County consistent with the holding of the Third Department in St. Lawrence III 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: December 12, 2014 Albany, New York By: WHITEMAN OSTERMAN & HANNA LLP Christopher E. Buckey, Esq. Robe1t S. Rosborough IV, Esq. One Commerce Plaza Albany, New York 12260 (518) 487~7600 41 NANCY ROSE STORMER, P.C. Nancy Rose Stormer, Esq. Michael Bagge, Esq. 1325 Belle A venue Utica, New York 13501 (315) 797-0110 BOND SCHOENECK & KING, PLLC Raymond A. Meier, Esq. 501 Main Street Utica, New York 13501 (315) 738-1223 Attorneys for Respondent 42 ADDENDUM STATE OF NEW YORK FIFTH JUDICIAL DISTRICT SUPREME COURT COUNTY OF ONEIDA ******************************* COUNTY OF ONEIDA, Plaintiff-Petitioner, ~against - Index No.: CA2014-526 RJI No.: 32-14-0227 NIRA V R. SHAH, MD, MPH, as Commissioner of the New York State Department of'Health and THE NEW YORK STATE DEPARTMENT OF HEAL TH, NEW YORK STA TE OFFICE FOR PEOPLE WITH DEVELOPMENTAL DISABILITIES, LAURIE KELLEY, As Commissioner of the New York State Office for People with Developmental Disabilities, JOYCE SClALDONE, as Record Access Officer of the New York State Office for People with Developmental Disabilities, CHERYL A. MUGNO, as FOIL Appeals Officer of the New York State Office for People with Developmental Disabilities, NEW YORK STATE OFFICE OF MENTAL HEALTH, and JOHN V. TAURlELLO, as Commissioner of the New York State Office of Mental Health1 Defendants-Respondents. ******************************* DECISION Oneida County Comihouse Utica, New York 13501 June 11, 2014 HELD BEFORE: THE HONORABLE BERNADETTE T. CLARK> SUPREME COURT JUSTICE APPEARANCES: WHITEMAN, OSTERMAN & HANNA, LLP Attorneys for Plaintiff-Petitioner One Commerce Plaza Albany, New York 12260 BY: CHRISTOPHER E. BUCKEY, ESQ. NANCY ROSE STORMER, P.C. Attorney for Plaintlff~Petitioner 1325 Belle Avenue Utica, New York 13501 ERIC T. SCHNEIDERMAN, ESQ. Attorney General of the State of New York The Capitol Albany, New York 12224 BY: C, HARRIS DAGUE, ESQ. Reported By: Regina A. Dewhurst Senior Court Reporter .. ' County of Oneida v. Nirav R. Shah, MD, MPH, et al. 2 Motion Decision - June 11, 2014 THE COURT: You know, Mr. Dague, it occurs to 2 this Court that, you know, these delays and these -- and 3 the circumstances in this case, you know, cry out for 4 action, cry out for, you know, some, you know -- take a 5 stand and get these issues resolved once and for all. I 6 mean, you know, yes, stays generally mean that but you1re 7 talking about litigation that has been going on for a 8 number of years, eight years may be. I don1t know how 9 many. And, you know, I think that, you know, these l 0 counties -- or here the papers allege and Mr. Buckey's 11 argued that Oneida County has been basically like jumping 12 over "-jumping through hoops, jumping over hurdles, 13 being constantly facing roadblocks that the State is 14 throwing up at it, inc1uding this last one which was the 15 Section 61. So, I mean, you know, you can't look at it 16 in a vacuum and so, yes, the stay generally means that, 17 but I think here~" you know, and I've listened to all 18 your arguments and I've honestly, you know, endeavored to 19 read as much as I could. l believe that this case is 20 different. I believe that the County went to POIL 21 because they were directed that way. They tried, you 22 know, Section 33.13. Theytve tried to ask for discovery, 23 and J think they're entitled to it. I think that it is 24 consistent with my prior decision in this case, to get 25 the information and to get what is there. I know County of Oneida v. Nirav R. Shah; MD, MPH, et al. 3 Motion Decision - June 11, 2014 Mr. LoCicero said it's unknown and unknowable. I don 1t 2 think that he can make that statement without engaging in 3 a process to try to get the materials and bring them 4 forward, and then if it's unknown and unknowable, then I 5 think that statement can be made, but I think that 6 statement is very premature based on what Pve read on 7 both sides. I don't think that you can say that 8 something's unknown and unknowable when you haven1t 9 really tl'ied to figure out what you have and given over 10 things that might be helpful and then refine the searches 11 and keep at it until, you know, the resources have been, 12 you know, expended and the time has been expended. I 13 just don't t~ink you can say -- well, you know, throw up 14 your hands and say after eight years of litigating, just 15 say; well, you know, you've gotten this far and, you 16 know, this latest decision, these latest series of t 7 decisions by my colleagues in other counties which says 18 Section 61, you know, is not a clarifying amendment. It 19 is a retroactive amendment. It is unconstitutional 20 because it deprives the counsel of a vested right. You 21 know, you can\just throw up your hands and say, well, 22 you know, listen, you know, we've thrown everything we 23 can at you but it1s unknown and unknowable. So, 24 therefore, the Court finds that ·- I've already said •• 25 venue is proper,.that Section 61 temains unconstitutional, County of Oneida v. Nirav R. Shah, MD, MPH, et al. 4 Motion Decision-June 11, 2014 and the request in the Second Amended Complaint based on 2 the claims submitted -w October 3rd, November 13th, 3 December 11th of 2013 and the claim of January 22nd, 4 2014 ~~ totallng $1,915,882.79 are to be reimbursed to 5 Oneida County, petitioner, and the Department of Health 6 is directed to pay these claims that they previously 7 denied within 30 days of the notice of entry. 8 With regard to the discovery, again, the Court 9 based on my 13 years experience as a Judge, you know, 10 without these discovery devices, including FOLL, 11 including the statutes that provide it, with exceptions 12 that deal with governmental agencies, again, as partners 13 and~- you know, there has to be open discovery. There1s 14 no trial by ambush in this Court, nor should there be in 15 any court. Trials are by their very nature, you know, a 16 vehicle to discover the truth and you can't -- if one 17 party has all the marbles and they're not going to give 18 them up and they1re not going to show the other party 19 what they have, I mean -- what they have at the end of 20 the day -- and I1m cognizant of the fact that, you know, 21 maybe Mr. Locicero two years from now -- I hope it 22 doesn't take that long but -- I'm retiring in seven, just 23 so you know-- but Mr. LoCicero atthe end of the day may 24 be right, it's unknown and unknowable but, you know, the :1 25 petitioners through their counsel, Ms, Stormer, have County of Oneiga v. Nil'av R. Shah, MD, MPH, et al. 5 Motion Decision - June 11, 2014 demonstrated that they can figure this out when given the 2 information, and I think they should have it. 3 So I appreciate, again, all the work of 4 counsel~ and I think that the best way to go about doing 5 this is -- you can prepare an order, Mr. Buckey, but I 6 think that we need to bring everybody together and sit in 7 a room and talk about what is knowable and what is known 8 and what we have so that everybody can be on the same 9 page as colleagues, as patiners, in the endeavor to take~~ 10 that Oneida County has fulfilled its obligation to take 11 care of its citizens and now they're looking for 12 reimbursement; that was a vested right. I think we have 13 to sit around a table and discuss what we have, what kind 14 of searches can uncover thfa material, you know, and I 5 let's find out, okay, and so that's my decision. 16 MR. BUCKEY: Judge-- 17 THE COURT: So I would like to do that as soon 18 as possible before you start looking for boxes. 19 MR. BUCKEY: In the proposed order should I 20 address the FOIL as well, your Honor? 21 THECOURT: Yes. 22 MR. BUCKEY: Okay. 23 THE COURT: The Court's granting the relief 24 under FOIL as well as 33.13 and the discovery that was 25 requested under 408. I'm going reserve decision on the County of Oneida v. Nirav R. Shah, MD, MPH, et al. 6 Motion Decision - June 11, 2014 attorney fees right now. Okay? 2 MR. BUCKEY: Understood, your Honor, I'll 3 submit an order on notice to Mr. Dague. 4 MR. DAGUE: Judge, should the order contain 5 instructions for this mediation or sit down? 6 THE COURT: Yeah, I think so. ft-- maybe not 7 specifically with dates or anything because I want you to 8 go back to your clients, I want you to discuss it with 9 your clients, but I think that both sides should identify 10 who the people are that should be sitting around this 11 table, first of all, and I'd like to have a meeting with 12 counsel present, of coUl'se, and anybody, you know, you 13 feel is -- you know, if it's Mr. Lo Cicero, if it's some 14 of the other officers that wel'e -- submitted affidavits 15 on -- for your client that know about these records, you 16 know, whoever you think you need to get, and then I think 17 you should exchange letters within two weeks. So, in 18 other words, I want you to identify, Mr. Buckey, who you 19 think should be there and then, Mr. Dague, I want you to 20 identify who you think should be there and WW of your own 21 clients, you know, from your own side, and then once you 22 exchange those lists with each other, then T will give 23 each of you an opportunity to say~- you know, Mr. Buckey, 24 you can address the Court in a letter and say, you know, 25 Mr. Dague1s identified these people. I think you should County of Oneida v. Nirav R. Shah, MD, MPH, et al. 7 Motion Decision - June 11, 2014 also include this person, okay, from whqt basically -- 2 basically based on your knowledge, and it might not be a 3 name of a person but it might be the person in this job, 4 okay. Because of all of your work uncovering records, 5 maybe you know who should be at the table, and then I'll 6 take that under advertisement. And, Mr. Dague, the same 7 for you. Once you get Mr. Buckey's list, if you think 8 there are other people that you think would be important 9 from the County1s perspective to be there -- and, again, 1 0 not necessarily in name but a position, a person, I mean, 11 a job title. 12 MR. DAGUE: Yes. J 3 THE COURT: Then you can ask the Court for the J 4 same. And then -- you know, I'm envisioning literally a 15 sit down where we can--you know, Pl! be the moderator, 16 so to speak, or whatever and let's see if we could get 17 anywhere. 18 MR. BUCKEY: That would be terrific, your 19 Honor. 20 THE COURT: You know, I don't have a lot of 21 trials this summer. A lot of them have settled, so I 22 have significant blocks of time and I'm willing to do 23 this, okay. I think it's important. All right, thank 24 you both. Thank all of you really and great work. 25 Again, I leam new things about briefing everyday when I County of Oneida v. Nirav R. Shah, MD, MPH, et al. 8 Motion Decision~ June 11, 2014 1 see the work that's gone into this, so thank you all. 2 Very professional job. 3 (Whereupon, the proceedings were concluded.) 4 5 6 7 8 * * * CERTIFICATE 9 I, Regina A. Dewhurst, Senior Court Reporter in and 10 for the Fifth Judicial District, State of New York, DO HEREBY 11 CERTIFY that the foregoing is a true and correct tl'anscript of 12 my stenographic notes in the above~entitled matter to the best 13 of my ability. 14 15 DATED: June 13, 2014 16 17 18 19 20 REGINA A. DEWHURST 21 Senior Court Reporter 22 23 24 25