In the Matter of Woodside Manor Nursing Home, et al., Appellants,v.Nirav R. Shah, M.D.,, et al., Respondents.BriefN.Y.February 17, 2015To be argued by: Jennie L . Shufelt Time Requested: 10 Minutes COURT OF APPEALS STATE OF NEW YORK WOODSIDE M A N O R NURSING HOME, A V O N NURSING HOME, THE BRIGHTONIAN, CONESUS L A K E NURSING HOME, E L M M A N O R NURSING HOME, HORNELL NURSING HOME, HURLBUT NURSING HOME, N E W A R K M A N O R NURSING HOME, PENFIELD P L A C E , SENECA NURSING A N D REHABILITATION CENTER, SHORWINDS NURSING HOME, WEDGEWOOD NURSING HOME, Petitioners-Appellants, -against- NIRAV R. SHAH, M.D., AS COMMISSIONER OF H E A L T H OF THE STATE OF NEW Y O R K , AND ROBERT L . MEGNA, AS DIRECTOR OF THE BUDGET OF THE STATE OF NEW Y O R K , OR THEIR SUCCESSORS, Respondents-Respondents. BRIEF OF AMICUS CURIAE LEADINGAGE NEW YORK, INC. APL-2014-00083 Monroe County Clerk's Index No. 12-1306 HTNMAN STRAUB P.C.. Attorneys fox Amicus Curiae LeadingAge New York, Inc. 121 State Street Albany, New York 12207 (518)436-0751 Of Counsel: Jennie L. Shufelt, Esq. Dated: November 21, 2014 TABLE OF CONTENTS Page No. PRELIMINARY STATEMENT 1 INTEREST OF AMICUS CURIAE 4 FACTUAL BACKGROUND AND PROCEDURAL HISTORY....... 7 ARGUMENT ; 15 POINTI 15 THE FOURTH DEPARTMENT ERRED IN APPLYING THE MONETARY CAP RETROACTIVELY TO RATE APPEALS FILED PRIOR TO THE EFFECTIVE DATE OF THE AMENDMENTS.... 15 A. Retroactive application of the cap contradicts the plain language of the 2010 and 2011 Amendments, which prohibits an interpretation that would alter or affect previously incurred or conferred rights, obligations, duties or interests 16 B. Public Health Law 17(c), added as part of the 2011 Amendment, does not require retroactive application of the cap ...21 C. Interpreting the cap as applying retroactively would render the 2010 and 2011 Amendments unconstitutional and objectionable, and such interpretation must be avoided because another construction is possible 24 POINT H.. . . 31 THE DEPARTMENT'S OBLIGATION TO DECIDE RATE APPEALS WITHIN A REASONABLE PERIOD IS A MANDATORY OBLIGATION SUEJECT TO MANDAMUS 31 CONCLUSION 34 TABLE OF AUTHORITIES Page No. Cases 2433 Knapp Street Restaurant Bar Inc. v. Dept. of Consumer Affairs of City of New York, 150 A.D.2d 464 (2d Dept. 1989) 32 Alliance of Am. Insurers v. Chu, 77 N.Y.2d 573 (1991) passim Charles S. Wilson Memorial Hospital v. Axelrod, 76 A.D.2d 968 (3dDept. 1980) 30 County of Niagara v. Dairies, 91 A.D.3d 1288 (4th Dept. 2012) 19, 20 County of St. Lawrence v. Daines, 81 A;D.3d212 (3d Dept. 2011) .24 James Sq. Assoc. LP v. Mullen, 21 N.Y.3d 233 (2013) 29 Kauffman & Sons Saddlery Co. v. Miller, 298 N.Y. 33 (1948) 24, 28, 30 Kinney v. Kinney, 48 A.D.2d 1002 (4th Dept. 1.975) 20 Majewski v. Broadalhin-Perth Cent. Sch. Dist, 91 N.Y.2d 577 (1998) 16, 18,29 Matter of Adult Home at Erie Sta., Inc. v. Assessor & Bd. of Assessment Review of City of Middletown, 9 N.Y.3d 970 (2007) 6 Matter of Allied Grocers Coop. v. Tax Appeals Trib., 162 A.D.2d 791 (3d Dept. 1990) 25 Matter of Blossom View Nursing Home v. Novello, 4 N.Y.3d 808 (2005) 6, 32 Matter of County of St. Lawrence v. Daines, 81 A.D.3d212 (3d Dept. 2011) 16 Matter of DaimlerChrysler Corp. v. Spitzer, 1 N.Y.3d 653 (2006) 18 Matter of Jacob, 86N.Y.2d 651 (1995) 24,28, 30 Matter of New York State Health Facilities Association, Inc. v. Sheehan, 21N.Y.3d908 (2013) 6 Murphy v. Board of Educ, North Bellmore Union Free School Dist., 104 A.D.2d 796 (2d Dept. 1984), a f f d 64 N.Y.2d 856 (1985) 17 New York Public Interest Research Group v. Dinkins, 88 N.Y.2d 377 (1994) 31 New York State Association of Counties v. Axelrod, 78 N.Y.2d 158 (1991) 6 People ex rel. Ostrander v. Chopin, 105 N.Y. 309 (1887) 31 Sanders v. Winship, 57 N.Y.2d 391 (1982) 18 Utica Cheese, Inc. v. Barber, 49N.Y.2d 1028 (1980) ..31, 32 White Plains Nursing Home v. Whalen,53 A.D.2d 926 (3d Dept. 1976), aff'd42 N.Y.2d 838 (1977) 24 Page No. Other Authorities 10 NYCRR § 86-2.10(b) . : 8 10 N Y C R R § 86-2.13(a) 10 10 N Y C R R § 86-2.13(b) 9 10 N Y C R R § 86-2.14(a) 9 10 N Y C R R § 86-2.14(b) -. 10, 33 42 CFR447.253(e).. 8,31 42U.S.C. § 1396a(a)(13)(A) 7 L . 2010, ch. 109,Pt.B, §29 12 L . 2010, ch. 109, Pt. C, §40. 18 L . 2010, ch. 109, Pt. C, § 40(c) 16, 17, 19, 21 L . 2011, ch. 59, Pt. H, § 98. passim L . 2011, ch: 59, Pt. H, § 111 16, 17, 18, 21 N.Y. Statutes §51(a) ; 30 N . Y . Statutes § 53 (McKinney's 2014) 16 N . Y . Statutes § 98 (McKinney's 2014) 18 PHL§ 2807(3) 7 PHL§ 2808 8 PHL§ 2808(3) . , 7 PHL § 2808(15) 11 PHL§ 2808(17).. 10, 11,21 PHL § 2808(17)(a) 12, 23,31 PHL § 2808(17)(b) , • 12 PHL§ 2808(17)(c) 21 PRELIMINARY STATEMENT Residential health care facilities, also known as nursing homes, are a critical component of the State's health care system, providing intensive care to the State's most vulnerable populations. The majority of residents in these homes are participants in the State's Medicaid program, a federal and state partnership to provide health care to needy persons. Nursing homes are reimbursed for the services provided to Medicaid beneficiaries at a rate that is determined through a complicated rate-setting methodology that has historically included a number of variable components. Due to the complexity of the formula and the numerous components included in the rates, it has been commonplace for the Department of Health (the "Department"), which administers the Medicaid Program, to make computational and mathematical errors when it calculates the rates these homes will be paid, which results in the homes being paid at a rate that is less than what they are entitled to under State law. Theoretically, the State provides these homes with a process, commonly known as a rate appeal, to seek correction of the Department's mathematical and computational errors and, in turn, ensure payment of the correct rate. In practice, this rate appeal process is broken. Thousands of rate appeals, many decades old (some even dating back to the 1970s), have been lingering undecided in a bureaucratic black hole while the homes that are providing services are underpaid. These homes, many of which are not-for-profit corporations, already struggle to make up for the inadequate Medicaid reimbursement they receive (even when their rates are correctly calculated), and are forced to shift costs to other payers. As not- for-profit entities, when they do not even receive the payment they are entitled to under Medicaid payment rules, they are forced to make hard decisions about cutting staff, reducing services, and foregoing capital improvements, to the detriment of the residents of these homes. For years, nursing homes have been forced to bring Article 78 proceedings to compel the Department to perform its obligation to decide their rate appeals. The present Article 78 proceeding, which was brought by twelve nursing homes (the "Homes") to compel the Department to decide 95 rate appeals, is such a proceeding. However, while the Department has historically agreed to entry of an order establishing a deadline for it to render a rate appeal decision in other cases, this case was different. The Department moved to dismiss the Homes' petition on the ground that a 2010 monetary cap on the amount of rate revisions that could be made during a specified timeframe retroactively applied to the Homes' rate appeals and barred the relief they sought. While the Supreme Court agreed with the Homes, refused to apply the monetary cap retroactively to the Homes' rate appeals, and issued an order compelling the Department to decide the Homes' appeals, the Appellate Division Fourth Department reversed and dismissed the petition in its entirety. For the reasons discussed in this memorandum of law, the Fourth Department's memorandum and order was in error and should be reversed. The express language of the statutes enacting the monetary cap makes clear that the cap was not intended to apply retroactively to rate appeals filed prior to April 1, 2010. Retroactive application of the cap violates clearly established rules of statutory construction. Moreover, even if the statute was intended to apply retroactively, it would, i f so applied, be unconstitutional and invalid. - INTEREST OF AMICUS CURIAE LeadingAge New York, Inc. ("LeadingAge"), formerly the New York Association of Homes & Services for the Aging ("NYAHSA"), is a state-wide not- for-profit trade association that has operated for over 50 years, and currently represents the interests of nearly five-hundred not-for-profit continuing care providers, approximately half of which are nursing homes that will be directly affected by the outcome of the present appeal. LeadingAge provides legislative, regulatory, and legal advocacy for its members and is uniquely positioned to provide this Court with information about the severe implications of this appeal on the not-for-profit nursing homes across the State that provide health care services to New York's most vulnerable elderly population. LeadingAge has a substantial interest in the outcome of this appeal because the right and ability of its members to have their pending rate appeals decided by the Department, and, in turn, to receive full payment for the services they have rendered to the State's Medicaid population, will be directly affected by the outcome of this appeal. If the Court upholds the Fourth Department's memorandum and order, these not-for-profit homes will be resigned to waiting indefinitely for their pending rate appeals to be decided and they will never receive full payment of the amounts to which they are lawfully entitled. This is especially troubling as the State has recently revised its nursing home reimbursement methodology to a new "statewide pricing" formula whereby rate appeals will be less frequent and the rate appeals under the prior methodology will go unresolved. These nursing homes already face amiual losses on their Medicaid residents, which must be made up through prices charged to other payers or through a diminution of services. This problem will only be exacerbated if they are precluded from compelling the Department to perform its duties under the Public Health Law and its own regulations, and will ultimately have a detrimental impact on residents, as these homes struggle to cut costs to stay in business while they wait in limbo for their rate appeals to be decided. Given this, LeadingAge. strongly supports the position of the Homes and believes that the statutory language and case law cited by the Homes in support of their appeal establish (1) that under Federal and State Medicaid laws, the Homes (and the hundreds of other nursing homes with pending rate appeals) are entitled to adjudication of their rate appeals, (2) that the monetary cap imposed on rate appeals by amendments to the Public Health Law enacted in 2010 and 2011 do not apply retroactively to rate, appeals filed prior to the effective date of those amendments, and (3) if the Court finds that the Legislature did intend the monetary cap to apply retroactively, it must be invalidated as an unconstitutional retroactive deprivation of the Homes' vested property right in payment of the full rate to which they are entitled. LeadingAge has sought and obtained leave to file amicus briefs in numerous cases that, like this case, have raised issues of significance to its membership. See, e.g., Matter of New York State Health Facilities Association, Inc. v. Sheehan, 21 N.Y.3d 908 (2013); Matter of Adult Home at Erie Sta., Inc. v. Assessor & Bd. of Assessment Review of City of Middletown, 9 N.Y.3d 970 (2007) (granting motion for leave to appear amicus curiae to New York Association of Homes and Services for the Aging, now known as LeadingAge New York, Inc.); Matter of Blossom View Nursing Home v. Novello, 4 N.Y.3d 808 (2005) (same); see also New York State Association of Counties v. Axelrod, 78 N.Y.2d 158 (1991). Because its statewide membership will be affected by the Court's determination of this appeal, LeadingAge has an interest in the controversy that is distinct from the parties, and respectfully requests that the legal arguments contained in this Amicus Brief be reviewed and considered by the Court. FACTUAL BACKGROUND AND PROCEDURAL HISTORY Medicaid is a federal and state cost-sharing program through which New York and other participating states provide medical assistance to their most vulnerable and needy populations. Health care services are provided by both for- profit and not-for-profit health care providers that provide a range of services to the State's Medicaid population pursuant to contracts with the State, and in accordance with both Federal and State laws and regulations that govern the Medicaid program. Among the providers that serve the State's Medicaid beneficiaries are residential health care facilities, otherwise known as nursing homes. These nursing homes, many of which are not-for-profit corporations, partner with the State to provide intensive, twenty-four hour a day health care services to the State's elderly Medicaid beneficiaries. See N .Y. Public Health Law ("PHL") § 2808(3). Under Federal Medicaid laws and regulations, states are required to adopt a method for reimbursing residential health care facilities that participate in the Medicaid program. 42 U.S.C. § 1396a(a)(13)(A). In exchange for the services provided to Medicaid beneficiaries, New York has agreed to pay these homes an amount that is "reasonable and adequate to meet the costs that must be incurred by efficiently and economically operated facilities." PHL § 2807(3). From 1986 until 2012, the State used a complicated reimbursement methodology to calculate the rates of payment for nursing homes, known as the Resource Utilization Group ("RUG") case mix reimbursement methodology. The RUG methodology is a prospective system that establishes reimbursement rates using a nursing home's allowable costs in a base year or period, which is then adjusted for certain factors such as regional wage differentials and the level of care required by the home's residents. See 10 N Y C R R 86-2.10(b). From 1986 until 2009, the State used a . 1983 base year and the RUG-II (RUG-II) methodology. From 2009 until 2012, the State implemented a new "rebasing" methodology which included an updated RUGTII methodology and updated cost base year. In 2012, the State shifted to a statewide pricing methodology, which is the methodology that exists today. As a result of the complex nature of the State's reimbursement methodology, mathematical and computational errors are routinely made by the Department. These mathematical and computational errors often result in homes being paid less than the amount they are entitled to under the State's established reimbursement methodology. Pursuant to Federal Medicaid regulations, the State is obligated to provide nursing homes that participate in the Medicaid program with an appeals procedure through which providers can receive "prompt administrative review" of payment rates. 42 CFR 447.253(e). To satisfy this requirement, New York provides nursing homes with an administrative review process for challenging rate determinations, which are commonly known as "rate appeals." See PHL § 2808 and 10 N Y C R R 86-2.13(b). The State has affirmatively represented to the Centers for Medicare and Medicaid Services ("CMS") that this process satisfies its legal obligation to provide a process for prompt administrative review. (R. 103). These rate appeals are not used .to challenge the adequacy of payment rates, but rather they are used to correct mathematical and computational errors made by the Department, which often result in homes receiving a lower reimbursement rate than they are entitled to under the established payment methodology. (See R. 63 at 19; 10 N Y C R R § 86-2.14(a)). For most of the State's nursing homes, and especially those that operate as not-for-profit corporations, these incorrect rates . have severe consequences to the homes' financial viability and ability to serve their residents. Medicaid reimbursement rates, even-if correctly calculated, fall well short of covering the homes' actual allowable costs. As such, these nursing homes already experience annual losses with respect to their Medicaid residents. [See, e.g., R. 98, 100). These deficits must be made up by increasing the costs to other payors, or by cutting staff, reducing or eliminating services, and foregoing capital improvements. (See R. 90). As such, the failure of the State to reimburse nursing homes at the appropriate reimbursement rate, solely as a result of mathematical and computational errors on the part of the Department, has a detrimental effect both on the provider community and on the residents of New York State that they serve. The rate appeal process is intended to reduce the negative impact of these computational errors by affording nursing homes a timely mechanism for correcting their rates and ensuring that the homes are reimbursed in accordance with established payment methodologies. Homes are required to file a rate appeal within 120 days of the home's receipt of its rate. 10 N Y C R R §86-2.13(a). Under Public Health Law § 2808(17) and the Department's regulations (10 N Y C R R 86- 2.14(b)),. the Department must decide a rate appeal within one year from the later of the. filing of the rate appeal or the expiration of the 120-day deadline for filing such appeal. • • Unfortunately, in practice, the rate appeal process has afforded the State's nursing homes little relief from the Department's errors. Literally thousands of rate appeals, many of which were filed years ago, have languished in bureaucratic limbo. The Department's obligation to decide rate appeals on a timely basis has gone ignored for years. The Department has, in large measure, waited for a nursing home to file an Article 78 proceeding to compel it to act before it has taken action on pending rate appeals. Indeed, it has become common practice for nursing homes to bring Article 78 proceedings to compel the Department to adjudicate rate appeals that have lingered well beyond the one year time period, and for the Department, in response, to stipulate to court orders requiring the Department to resolve that rate appeal within a defined period of time. (R. 72 % 10, 94 31). The Department has required nursing homes already operating on slim budgets to waste not only their own resources, but the court's resources, time and time again, to compel the Department to.perform the obligations it is required by its own regulations to perform. As a result of the Department's refusal to perform its obligation to adjudicate rate appeals, thousands of rate appeals have been waiting for years for adjudication. In fact, as of 2012, there were approximately 7,500 pending rate appeals.- (R. 106). Some of these appeals date back to the 1970's. The State's nursing homes are effectively being required to wait indefinitely for adjudication of their rate appeals, and, while those appeals are pending; are being deprived of payment of the rate to which they are entitled under .the State5 s payment •methodology. . ' - In 2010, the Legislature amended PHL §2808(17), effective April 1, 2010, to add a new part (b) (hereinafter the "2010 Amendment"), which provided for a monetary cap1 of $80,000,000 on the aggregate annual amount of revisions to The Appellate Division incorrectly refers to both a moratorium on rate appeals and a cap on the dollar amount of rate appeals. This characterization of the 2010 and 2011 Amendments is incorrect, as no moratorium is imposed by the 2010 or 2011 Amendments. Contrast the language of the 2010 and 2011 Amendments with the previous moratoria imposed by PHL § 2808(15) (". • • for services provided by residential health care facilities for the period April first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-six, the commissioner shall not be required to revise a certified rate of payment established pursuant to this article based on consideration of rate appeals filed by a residential health care facility.") and PHL § 2808(17)(a) ("... for the period April first, nineteen hundred ninety-seven through March thirty-first, nineteen hundred ninety-eight, the commissioner shall not be required to revise a ,11 certified rates in connection with certain rate appeals filed by residential health' care facilities. The 2010 Amendment provided: Notwithstanding any inconsistent provision of law or regulation to the contrary, for the state fiscal year beginning April first, two thousand ten and ending March' thirty-first, two-thousand eleven, the commissioner shall not be required to revise certified rates of payment established pursuant to this article for rate periods prior to April first, two-thousand eleven . . . in excess of an aggregate annual amount of eighty million dollars for such state fiscal year. In revising such rates . - within such fiscal limit, the commissioner shall, in prioritizing such rate appeals, include consideration of which facilities the commissioner determines are facing significant financial hardship as well as such other considerations' as the commissioner deems appropriate...." L.2010,ch. 109, R B , §29. In 2011, the Legislature again amended PHL § 2808(17)(b) to extend the time period that the cap applied to until 2015, and to reduce the cap for the period of April 1, 2011 through March 31,2015 to $50,000,000. L. 2011, ch. 59, Pt. H , § 98 (hereinafterthe "2011 Amendment"). The 2010 and2011 Amendments didnot modify section 17(a)'s requirement that rate appeals be decided within a reasonable time. certified rate of payment established pursuant to this article based on consideration of rate appeals filed by a residential health care facility . . . " ) . 12 The Present Article 78 Proceeding The twelve nursing homes that are the petitioners herein have had 95 rate appeals pending before the Department for years. These appeals were filed • between 2000 and 2009. After demanding adjudication of their rate appeals by the Department to no avail, the Homes filed an Article 78 proceeding against the commissioner of the Department and the director of the Budget of the State of New York, to compel the Department to decide their rate appeals. However, unlike - prior actions brought by nursing homes, rather than agreeing to a court order • setting forth a time period for adjudication, the State moved to dismiss the petition. The crux of the State's argument was that the Homes did not have a clear legal right to mandamus because of the monetary cap imposed by the 2010 and 2011 Amendments. The State argued that this monetary cap applied retroactively to all rate appeals filed prior to the effective date of the statute, including the Homes' rate appeals. The Supreme Court correctly concluded that the monetary cap did "not apply retroactively where services were provided in accordance with the law in existence at the time the transactions were completed," and the Department was obligated to process the Homes' pending rate appeals in accordance with the laws in existence at that time. (R. 10). However, on appeal, the Appellate Division Fourth Department reversed, concluding that (1) the monetary cap imposed by the 2010 and 2011 Amendments retroactively applied to the Homes' rate appeals, and (2) that the Department had discretion to determine whether it had acted within a "reasonable time" to decide rate appeals and, as such, its decision .was not subject to mandamus. 14 ARGUMENT POINT I THE FOURTH DEPARTMENT ERRED IN APPLYING THE MONETARY CAP RETROACTIVELY TO RATE APPEALS FILED PRIOR TO THE EFFECTIVE DATE OF THE AMENDMENTS The present appeal involves 95 rate appeals filed by twelve nursing homes between 2000 and 2009, prior to the enactment of a monetary cap on certain rate appeals filed by nursing homes. There'is no dispute that the Homes' appeals were. ' timely filed, or that at the time that they were filed, the Department was obligated to decide these rate appeals within the one-year period provided for by the Department's regulations. (See R. 11). The Department has not decided the Homes' rate appeals, along with thousands of other rate appeals, many of which have been lingering for years. (See R. 279-80, 284). Despite this, the Fourth Department reversed the Supreme Court's order granting the petition, and dismissed the Homes' petition, finding that the monetary- cap retroactively applied to the Homes' rate appeals and that, as a result, the Homes could not establish clear entitlement to mandamus relief. For the reasons discussed more fully below, the Appellate Division's retroactive application of the monetary cap was in error and should be reversed. Nothing in the language of the Amendments, or the Legislative history, requires retroactive application of the cap. In fact, retroactive application is precluded by the language of the Amendments, which provided that the 2010 and " 2011 Amendments are not to be construed as altering, changing, affecting, impairing or defeating any rights, obligations, duties or interests that had previously been accmed, incurred or conferred. L. 2010, ch. 109, Pt. C, § 40(c); L. 2011, ch. 59, Pt. H , § 11 l(u). Moreover, i f the cap were to apply retroactively to rate appeals filed prior to 2010, the cap would'be unconstitutional and work a severe injustice on the nursing homes that serve the State's vulnerable populations. A. Retroactive application of the cap contradicts the plain language of the 2010 and 2011 Amendments, which prohibits an interpretation that would alter or affect previously incurred or conferred rights, obligations, duties or interests. Under this Court's well-established precedent, "retroactive operation is not favored . . . and statutes will not be given such construction unless the language expressly or by necessary implication requires it." Majewski v. Broadalhin-Perth Cent. Sch. Dist, 91 N.Y.2d 577, 574 (1998). Prospective application of a statute is strongly presumed. Id. at 589. Statutes that affect substantive rights and liabilities, or alter past transactions, are particularly suspect. Matter of County of St. Lawrence v. Daines, 81 A.D.3d 212 (3d Dept. 2011) (holding that Medicaid cap statute could not be applied retroactively to alter vested right to payment); see also Editor's Comment, N.Y. Statutes § 53 (McKinney's 2014) ("[A] pre-existing right or liability, whether or not it is constitutionally protected from change, will not be affected by legislation, unless legislative intent to the contrary is obvious. The doubts, i f any, will be resolved in favor of holding the subsequent statute to be prospective only."). Indeed, "[a]s a general rule,.statutes are to be construed as prospective only in the absence of an unequivocal expression of legislative intent to the contrary. . .." Murphy v. Board ofEduc, North Bellmore Union Free School Dist, 104 A.D.2d 796, 797 (2d Dept. 1984), aff.d64N.Y2d 856 (1985). :Under this precedent, the monetary cap imposed by the 2010.Amendment, . and subsequently amended by the 2011 Amendment, cannot be applied retroactively to the Homes' rate appeals or any rate appeal filed prior to April 1, 2010. The Fourth Department correctly noted tihat "there is no explicit statement that the-moratorium and cap shall apply to rate appeals filed before April 1, 2010 . . .," but incorrectly concluded that such application was necessarily implied. (R. 282).' The Fourth Department's determination that retroactivity is necessarily implied is incorrect because the statute can easily be interpreted as applying prospectively arid, more importantly, the Amendments affirmatively prohibit retroactive application of the monetary cap; Both the 2010 and 2011 Amendments clearly state: This act 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. 2010, ch. 109, Pt. C, § 40(c); L , 2011, ch. 59, Pt. H § l l l (u ) . 17 The effective date of the 2010 Amendment was April 1, 2010 (L. 2010, ch. 109, Pt. C, § 40), and the effective date of the 2011 Amendment was April 1, 2011 (L.2011,ch. 59,Pt.H, § 111). The courts must construe this "unambiguous language to give effect to its plain meaning" (Matter of Daimler Chrysler Corp; v. Spitzer, 7 N.Y.3d 653, 660 [2006]), must read this provision together with the language establishing the cap, and must give both effect and meaning. N.Y. Statutes §98 (McKinney's 2014) ("All parts of a statute must be harmonized with each other as well as with the general intent of the whole statute, and effect and meaning must, i f possible be given to the entire statute and every part and word thereof."); see also Sanders v. Winship, 57 N.Y.2d 391 (1982), quoting~N.Y. Statutes §98 (referring to "another rule of statutory construction that * effect and meaning must, if possible, be given to the entire statute and every part and word thereof.'"); Mdjewski v. Broadalbin- Perth Cent Sch. Dist, 91 N.Y.2d at 587 ("A construction that would render a provision superfluous is to be avoided."). Read together, this provision and the language of the cap collectively define the universe of rate appeals that are subject to the cap. Under the broadly worded prohibition against construing the cap to alter, change, affect, impair or defeat pre- existing rights, obligations, duties, or interests, the cap cannot.be interpreted to apply to rate appeals filed before the effective date of the 2010 and 2011 Amendments. Otherwise, the pre-existing right of nursing homes that filed their rate appeals prior to the Amendments to have their rate appeals decided within one year (and-the Department's corresponding duty to decide those appeals), and to receive mil payment under the correct rates of payment following such appeals, would be altered, changed, affected and impaired in contravention of the Legislature's explicit direction to the contrary. Section 40(c) of Part C of the 2010 Amendment and Section 111 of Part H of the 2011 Amendment, therefore, must be interpreted as establishing the beginning cut-off date for rate appeals subject to the cap. The language of the provision establishing the cap (2010 Amendment), and then modifying the cap (2011 Amendment), then sets the end date of rate appeals • subject to the cap (originally March 31, 2011 and subsequently extended to March 31,20.15). . . - In County of Niagara v. Daines, the Fourth Department interpreted this same language as prohibiting retroactive application of another section of Chapter. 109 of the Laws of 2010 to a county's pre-existing right to reimbursement of Medicaid overburden expenditures. County- of Niagara v. Daines, 91 A.D.3d 1288 (4th Dept. 2012) ("In addition, the 2010 amendment states that 'this act 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. 2010, ch.109, part B, § 40[c]]. Thus, for that reason as well, respondents' contention that the 2010 amendment defeats their preexisting duty to reimburse petitioner for the overburden expenditures is without merit."); see also Kinney v. Kinney, 48 A.D.2d 1002 (4th Dept. 1975) (holding that language providing that a statute "shall not be construed to alter, change, affect, impair or defeat any rights, obligations or interests heretofore accrued, incurred or conferred prior to the effective date of this act" indicates a Legislative intent that the statute should only operate prospectively). Like the Department's pre-.existing duty to reimburse the county for its overburden expenditures in County of Niagara v. Daines, the Department's pre- existing duty to decide rate appeals, on a timely basis and pay homes the correct rate of payment was not extinguished by the 2010 and 2011 Amendments. The Legislature's preservation of these rights was, in fact, necessary in light of "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 of Am. Insurers v. Chu, 11 N.Y.2d 573, 586 (1991) ("The 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."). - The Appellate Division Fourth Department's interpretation of the cap as retroactively applying to rate appeals filed prior to the date of the Amendments alters, changes, affects, impairs.and defeats the Homes' previously conferred rights and interests, and the Department's previously established obligations and duties, in contravention of the language of the Amendments. L. 2010, ch. 109, Pt. C, § 40(c); L. , 2011, ch. 59, Pt. H , § Lll(u). B. Public Health Law 17(c), added as part of the 2011 Amendment, does not require retroactive application of the cap. The Fourth Department also erred in concluding that a necessary implication of subdivision 17(c) of PHI, § 2.808, which was. added as part of the 2011 Amendment, is that the cap applied retroactively to all pending rate appeals. However, as discussed below, it is not necessary to interpret the cap as applying retroactively to give effect to subpart (c) of PHL § 2808(17). In fact, if anything, subpart (c) indicates that the Legislature did not intend the cap to have retroactive effect. The new subpart (c) to PHL § 2808(17), added by the 2011 Amendment, provides: Notwithstanding any other contrary provision of law, rule or regulation, for periods on and after April first, two thousand eleven the commissioner shall promulgate regulations, and may promulgate . emergency regulations, establishing priorities and time frames for processing rate appeals, including rate appeals filed prior to April first, two thousand eleven, within available administrative resources; provided, however, that such regulations shall not be inconsistent with the provisions of paragraph (b) of this subdivision. L. 2011, ch. 59, Pt. H, § 98 (effective April 1, 2011). This provision can easily be interpreted and given effect without giving the cap a disfavored retroactive effect. Under this provision, the Department was charged with establishing priorities and time frames for processing all rate appeals, including those filed prior to April 1,2011. However, under the last portion of subpart (c) ("such regulations shall not be inconsistent with the provisions of paragraph (b) of this subdivision"), the regulations must be designed to ensure that, with respect to those rate appeals subject to the cap (i.e. those filed between April 1, 2010 and March 31, 2015), the Department does not exceed the cap. Indeed, subpart (c) indicates that where the Legislature intended to include rate appeals filed prior to the effective date of the Amendment, it specifically said so. By implication, had the Department intended the cap to apply to rate appeals filed before the effective date, it would have included similar language in that section of the Amendments. It is also important to note that subpart (c) states that the process for deciding rate appeals should be "within available administrative resources." L. 2011, ch. 59, Pt. H, § 98. This language would have been unnecessary if all of the rate appeals that were subject to the process provided for in subpart (c) were already subject to the cap. The Fourth Department's conclusion that "there would be no need to prioritize the handling of those appeals unless they were encompassed by the moratorium and cap" (R. 283) is incorrect. At the time of the 2011 Amendment, thousands of rate appeals were languishing undecided with the Department of Health. Indeed, as of 2012, there were approximately 7,500 rate appeals pending before the Department. (R. 106, 284). , The significant backlog in undecided rate appeals occurred despite the Legislature's previous directive to decide all rate appeals within a reasonable period. PHL § 2808(17)(a).. Residential health pare facilities, many of which are not-for-profit corporations, have been severely affected by the Department's failure to process their rate appeals so that they can receive the.full payment to which they are lawfully entitled. Even when a nursing home receives the full amount of its established Medicaid rate, that rate is not adequate to cover .the actual, allowable operating costs incurred in serving-the State's Medicaid population. (R. 90, 9-11). This problem is.severely compounded when the State delays deciding their rate appeals and, therefore, paying the full established rate, especially given that the State does not pay these facilities interest on the amounts owed. (R. 72, If 11). Subpart (c) remedies this backlog by requiring the Department to develop a process to prioritize and decide the decades of rate appeals waiting for the Department's action. At the same time, it ensures that the Department complies with the cap with respect to those rate appeals filed after April 1, 2010. Because ,: = . , ...23. .;. r:,:.;- . : :•>;• subpart (c) can easily be interpreted without giving retroactive effect to the cap, it does not provide a basis for the strongly disfavored retroactive application of the statute. See Matter of Jacob, 86 N;Y.2d 651 (1995), quoting Kaufman & Sons Saddlery Co. v. Miller, 298 N.Y. 33 (1948). C. Interpreting the cap as applying retroactively would render the 2010 and 2011 Amendments unconstitutional and objectionable, and such interpretation must be avoided because another construction is possible. It is beyond dispute that nursing homes'nave a vested property right in payment under the Medicaid program for services rendered at an established rate. White Plains Nursing Home v. Whalen, 53 A.D.'2d 926, 927 (3d Dept. 1976), q f f d 42 N.Y.2d 838 (1977). Indeed, the Respondents do not contend otherwise. Retroactive application of the cap would deprive the State's nursing homes of any hope of adjudication of their rate appeals and, as a consequence, directly interfere with the vested right of nursing homes to payment of the M l amount of the rates to which they are entitled. In doing so, retroactive application of the cap runs afoul of well-established constitutional principles. See County of St. Lawrence v. Daines, 81 A.D.3d at 216 (Medicaid Gap Statute could only be applied prospectively because retroactive application to transactions completed prior to enactment, for which reimbursement was owed in accordance with pre-existing rules, was impermissible, because it would "impair vested rights or alter past transactions or 24 considerations."), quoting Matter of Allied Grocers Coop. v. Tax Appeals Trib., 162 A.D.2d791 (3d Dept. 1990). In evaluating whether the retroactive application of a statute violates the constitution, "the courts must balance a number of factors, including 'fairness to the parties, reliance on pre-existing law, the extent of retroactivity and the nature of the public interest to be served by the law' to determine whether the rights affected are subject to alteration by the Legislature." Alliance of Am. Insurers v. Chus 77 N.Y.-2d at 586. A statute that impairs vested rights, such as the cap at issue, is perhaps the clearest case of a retroactive statute that is unconstitutional. Id. at 585- 86 ("Although a statute is not invalid merely because it reaches back to establish • the legal significance of events occurring before its enactment, a traditional principle applied in detennining the constitutionality of such legislation is that the Legislature is not free to impair vested or property rights."). In addition, retroactive application of the cap will cause serious injustice and hardship for the nursing homes that participate in the State's Medicaid program and provide intensive, 24-hour-a-day healthcare to the State's most needy and vulnerable population. Many of these nursing homes, including LeadingAge's members, are not-for-profit corporations that have been waiting for years for the Department to decide rate appeals that they have filed. Many of these rate appeals reflect simple mathematical errors, which would be clearly upheld upon review of h . . 25. the Department. These homes primarily serve, the State's Medicaid population, and, even with full payment of the Medicaid rate to which they are entitled, struggle to operate in the face of annual Medicaid deficits, which are caused in - large part by the fact that the Medicaid rates they receive do not cover their actual cost in providing care to Medicaid residents. These losses are worsened when the Department fails to pay these nursing homes the full amount of the payment to which they are entitled for years, without interest, due to simple mathematical and computational errors made by the Department. Retroactive application of the cap further exacerbates the financial -struggles of these homes. Even prior to the cap, the Department was not fulfilling its statutory and regulatory obligations, leaving thousands of rate appeals languishing in administrative limbo, and leaving the providers caring for the State's vulnerable populations with no choice but to find cost savings in other ways, such as by -reducing staffing, eliminating services, and foregoing capital improvements, that have the potential to detrimentally affect those very residents. Now, the Department seeks to use the cap to avoid rendering decisions on pending rate appeals in perpetuity. Although the cap is set to expire in March of 2015, the cap has done nothing but increase the backlog of rate appeals waiting endlessly for resolution. Unless nursing homes such as the petitioners can compel the Department to fulfill its obligations to decide rate appeals, there is no realistic hope that these homes' appeals will ever be decided or that they will ever receive the full payment they are entitled to under the law. The 2010 and 2011 Amendments provide no guidance as to how the department is to determine which facilities qualify as having a "hardship" and will, therefore, be prioritized under the cap. Indeed, • despite the Legislature's direction to the Department to create a process for prioritizing and deciding pending rate appeals almost four years ago {See L. 2011, -ch. 59, Pt..H, § 98), the Department has failed to create such a process. The rate . appeal process remains an administrative black hole within which the Department purports to exercise some form of "discretion" that effectively permits it to avoid its responsibilities entirely. • • Giving the Department carte blanche permission to avoid deciding the thousands- of backlogged rate appeals, and avoid paying the State's nursing homes amounts due and owing to them for services rendered years prior, without any recourse, would work a substantial injustice on these providers and the elderly vulnerable population that they serve. Indeed, the cap itself creates a perverse incentive on the part of the Department to riot be concerned with the accuracy of rate-setting, as it faces no consequence for any mistakes it makes and, i f anything derives a substantial benefit from such mistakes in the form of an interest-free loan from these homes. On the flip side, however, the Department requires.these homes to pay interest when it recoups Medicaid overpayments from these homes. By delaying payment to these nursing homes for years, the homes are deprived of the full value of the payment to which they are entitled. Each year that payment is delayed without interest, the value of that payment is reduced due to inflation and the homes are deprived of the use .of those funds. A classic case of justice delayed being justice denied-. This Court should not sanction the Department's indefensible failure to carry out its duties in the many years prior to the 2010 Amendment. . In light of the aforementioned constitutional infirmities and harmful • consequences of retroactive application of the cap, such retroactive application must be avoided if at all possible. "Where the language of a. statute is susceptible of two constructions, the courts will adopt that which avoids injustice, hardship, constitutional doubts or other objectionable results." Matter of Jacob, 86 N.Y.2d at 667, quoting Kaufman & Sons Saddlery.. Co. v. Miller, 298 N.Y. at 44; see also Alliance of Am. Insurers v. Chu, 11 N.Y.2d at 585 (noting that the court is required "to -avoid interpreting a statute in a way that would render it unconstitutional i f such a construction can be avoided."). For the reasons discussed above, retroactive application of the statute is not necessary and the statute can easily be interpreted as applying prospectively only. 28 Undoubtedly retroactive application of the cap to ail rate appeals would yield more cost savings to the State than prospective application. However, the State's budget concerns are not a valid justification for intruding on the vested rights of the State's nursing homes. Alliance of Am. Insurers v. Chu, 77 N.Y.2d at 588-89 ("The only justification the State can offer for the breach of its commitment is the enhancement of the State's general revenues. It is self-evident that this • cannot justify the State's actions ");-see also James Sq. Assoc. LP v. Mullen, 21 N.Y.3d233, 250 (2013) ("[RJaising money for the state budget is not a particularly impel l ing justification."). The state cannot give itself an interest free loan from the.State's nursing homes by retroactively apply the cap to avoid paying those homes amounts that they were lawfully entitled to within the timeframes • established by the law at the time that the services were rendered and the transactions completed. Alliance of Am. Insurers v. Chu, 77 N.Y.2d at 588. The State will still reap significant cost savings from the cap, and the Legislature's intent will be fulfilled, if the cap is applied prospectively, because the amount that it is required to spend on rate appeals filed between April 1, 2010 and March 31, 2015 will be capped. Where prospective application would still accomplish the Legislature's goals, or satisfy all of the language of the statute, a statute should not be applied retroactively absent a clear intent on the part of the Legislature. See Majewski v. Broadalbi-Perth Cent Sch. Dist, 91 N.Y.2d at 589; Charles S Wilson Memorial Hospital v. Axelrod, 76 A.D.2d 968 (3d Dept. 1980), citing N . Y . Statutes §. 51 (a). "Accordingly, a statute should not be given a retroactive effect when it is capable of any other construction." Charles S. Wilson Memorial Hospital v. Axelrod, 76 A.D.2d968 (3dDept. 1980), citingN.Y. Statutes § 51(a). In light of the constitutional infirmities and severe injustice that would result from retroactive application of the cap, and given the 2010 and 2011 Amendments can easily be interpreted as applying prospectivelyonly, retroactive application is precluded under well-established rules of statutory construction. Matter of Jacob, 86 N.Y.2d at 667, quoting Kaufman & Sons Saddlery Co. v. Miller, 298 N.Y. at 44; see also Alliance of Am. Insurers v. Chu, 77 N:Y.2d at 585. If, however, the Court were to determine that the Legislature intended the cap to apply retroactively, the Fourth Department's memorandum and order must still be reversed because, for the reasons stated above, the cap is unconstitutional and- • unenforceable to the extent it applies retroactively. 30. POINT II T H E D E P A R T M E N T ' S O B L I G A T I O N TO DECIDE R A T E A P P E A L S WITHIN A R E A S O N A B L E PERIOD IS A M A N D A T O R Y O B L I G A T I O N SUBJECT TO M A N D A M U S The Fourth Department also erred in holding that the Department had unfettered and unreviewable discretion to determine whether it is deciding rate appeals promptly, and within a "reasonable period," as required by Federal and State Medicaid law. 42 CFR § 447.253(e); PHL § 2808(17)(a). The Department's " obligation to decide rate appeals within a reasonable period is plainly mandatory under the Public Health Law and subject to mandamus. PHL § 2808(17)(a) ("Beginning April first, nineteen hundred ninety-nine and thereafter, the commissioner shall consider such rate appeals within a reasonable period." [emphasis added]); see also People ex rel Ostrander v. Chopin, 105 N.Y. 309 (1887) ("Besides, the statute is in terms mandatory, and declares that, on discovery of the defect, the comptroller shall cancel the sale, and cause the purchase money to be forthwith refunded."); New York Public Interest Research Group v. Dinkins, 88N.Y.2d377,384(1994). This Court has previously held that a statute directing agency action within a "reasonable time" was subject to mandamus to compel, despite the fact that no specific timeframe was provided by the statute.. Utica Cheese, Inc. v. Barber, 49 N.Y.2d 1028 (1980) (Commissioner of the Department of Agriculture and Markets directed to act on license application, which had been pending for sixteen months, despite the fact that Section 301 of the State Administrative Procedure Act only required the commissioner to reach a decision "within reasonable time"); see also 2433Knapp Street Restaurant Bar Inc. v. Dept. of Consumer Affairs of City of New York, 150 A.D.2d 464 (2d Dept. 1989), quoting Utica Cheese, supra ("In light of the appellants' approximately two-and-one-half year delay in deciding the petitioner's pending application, fairness 'requires that a hearing be held and a deteimination rendered promptly.'"). . By no stretch of the imagination can the Department's handling of the Homes' rate appeals, which have been pending since asearly as 2000, and remain undecided to this day, be in compliance with the "reasonable period" requirement of PHL § 2808(17)(a). See Matter of Blossom View Nursing Home v. Novello, 4 N.Y.3d 581 (2005) (holding that the Department's attempted audit more than six years after the services in question was untimely as a matter of law). Indeed, numerous nursing homes have had rate appeals pending for decades, some dating back to the 1970s. Delaying a decision on a rate appeal by almost 40 years is unreasonable as a matter of law. Moreover, even if it is accepted, arguendo, that the "prompt" requirement of Federal law, and the "reasonable, period" requirement of the Public Health Law, afford the Department some limited discretion, the Department has already defined, by regulation, "reasonable period" to mean the later of one year from the filing of the rate appeal or the expiration of the 120-day deadline for filing such appeal. 10 NYCRR 86-2.14(b). Under its own regulations, the Department's obligation to decide rate appeals within this one year period is mandatory and subject to mandamus. The Department no longer retains any arguable discretion to exceed the one year period set forth in its own regulations: The petitioners and the other nursing.homes that serve this State's elderly vulnerable population are entitled to have their rate appeals decided by the Department within one year, so that .they can receive full payment at the established rate for the services1 they have provided. The Department simply is not afforded discretion under the law to avoid that obligation and extract for itself an interest free loan, at the expense of the State's nursing homes and their residents. As such, its failure to decide the Homes' rate appeal is subject to mandamus. CONCLUSION For the foregoing reasons, this Court should reverse the Fourth Department's memorandum and order in this case. TO: Clerk of the Court of Appeals Court of Appeals Hall 20 Eagle Street Albany, N Y 12207 Victor Paladino, Esq. Assistant Solicitor General of Counsel Attorney for Respondents The Capitol Albany, N Y 12224 Thomas G. Smith, Esq. Harter Secrest & Emery LLP Attorneys for Petitioners-Appellants 1600 Bausch & Lomb Place Rochester, N Y 14604 DATED: Albany, New York November 21, 2014 Jepme L. Shufelt, E/sqj HrmnanStMibP.CS^ Attorneys for LeadingAge New York, Inc. 121 State Street Albany, New York 12207 (518) 436-0751 34