In the Matter of County of Chautauqua, Appellant,v.Nirav R. Shah,, et al., Respondents.BriefN.Y.September 7, 2016To be argued by: Christopher E. Buckey, Esq. 10 minutes requested New York Supreme Court APPELLATE DIVISION - FOURTH DEPARTMENT Docket No. CA 14-00923 IN THE MATIER OF THE APPLICATION OF COUNTY OF CHAUTAUQUA, Petitione1/PlaintiffRespondent/ At)/JeU<1nt, -against- NIH.AV R. SHAH, AS COMMISSIONER OF 'ffiE NEW YORK STATE DEPARTMENT OF HEALTH AND THE NEW YORK STATE DEPARTMENT OF HEALTH, I\espondents/Defendants-AppeUants/ResfJondents. SURREPLY BRIEF FOR RESPONDENT/ APPELLANT COUNTY OF CHAUTAUQUA WHITEMAN OSTERMAN & HANNA LLP Christopher E. Buckey, Esq., Of Counsel Robert S. Rosbot'ough IV, Esq., Of Counsel Monica R. Skanes, Esq., Of Counsel Nicholas J. Faso1 Esq., Of Counsel Jon E. Crain, Esq., Of Counsel One Commerce Plaza Albany, New York 12260 (518) 487-7600 NANCY ROSE STORMER, P.C. Nancy Rose Stormer, Esq., Of Counsel Michael Bagge, Esq., Of Counsel 1325 Belle Avenue Utica, New York 13501 (315) 797-0110 Attorneys for Petitioner/Plaintiff Respondent/ Appellant Co1mty of Cha11tauq1ia Chautauqua County Index No. Kl-2013-1266 TABLE OF CONTENTS SUPREME COURT ERRONEOUSLY DECLINED TO COMPEL RESPONDENTS TO REIMBURSE PETITIONER PURSUANT TO SOCIAL SERVICES LAW§ 368-A ....... 2 A. The Plain Language of Section 61 Does Not Extinguish Respondents' Underlying Reimbursement Obligation .............................................................................................. 2 B. Section 61 Retroactively Deprives Petitioner of its Vested Property Right to Reimbursement in Violation of General Construction Law § 93 ... .............. : ...... .,.., .... 4 C. Alternatively, the Special Facts Exception Bars Respondents from Relying on Section 61 to Deny Petitioner's Overburden Reimbursement Claims .................. .., .... 6 i TABLE OF AUTHOIUTIES State Cases Cinio v State a/New York, 306 NY 143 (1953), ........ ~ ... ····*'--··••HHUH'~'·•HHH••••'t,HHH#f4fHU#HH~•H•iU 3 James Sq. Assoc. LP v Mullen, 21NY3d233 (2013) ..................................................................... 6 Matter of Amsterdam-Manhattan Assoc. v Joy, 42 NY2d 941 (1977) .......................................... , 7 Matter of County of Herkimer v Daines, 60 AD3d 1456 (4th Dept 2009), lv denied 63 AD3d 1672 (4th Dept 2009), lv denied 13 NY3d 707 (2009) ............................................... 6 Matter of County of Niagara v Daines, 60 AD3d 1460 (4th Dept 2009), lv denied 63 AD3cl 1672 (4th Dept 2009), lv denied 13 NY3d 708 (2009) .......... ,. .............................. , .... 6 Matter of County of Niagara v Daines, 91AD3d1288 (4th Dept 2012), lv denied 94 AD3d 1481 (4th Dept 2012) .......................................... ,~·t•,.,, .... ~.f ..... f •• t••·· .. ~,, .... ~~,,~, •• ",, .• ~ .... ,, .••• 6 Matter of County of St. Lawrence v Daines, 81 AD3d 212 (3d Dept 2011), lv denied 17 NY3d 703 (2011) ... , ............ 11 •.•••••• ,~······~·····,··•,t••·····,~·····,········..,~·,···········,., ......... 4t••••·····~· ... ,. 3, 6 Matter of County of St. Lawrence v Shah, 95 AD3d 1548 (3d Dept 2012) ................................ 4, 5 Matter of Faymor Dev. Co. v Board of Stds. & Appeals of City of N. Y., 45 NY2d 560 Our Lady o/Good Counsel R.C. Church & School v Ball, 45 AD2d 66 (2d Dept 1974), Pines v State of New York, 115 AD3d 80 (2d Dept 2014), appeal dismissed Statutes, Constitutional Provisions & Regulations Social Services Law§ 368-a(l)(h) ,,,,,,~H,f#U\\ftl~'\\\l~UH~HH\HH~•H\IUl, .. U\-•H,,\'HO~H\nUHHH, .. ~,,., 1, 4, 5, 6 11 PRELIMINARY STATEMENT Petitioner County of Chautauqua ("Petitioner") respectfully submits this surreply brief in further support of its cross appeal from the Order and Judgment of Supreme Court, Chautauqua County (Chimes, J.), dated December 23, 2013 and entered January 27, 2014, declaring Section 61 of the 2012 Executive Budget unconstitutional, atmulling the determination of Respondents Nirav R. Shah, as Commissioner of the New York State Department of Health, and the New York State Department of Health (collectively, "Respondents") to deny Petitioner's claims for overburden reimbursement, directing Respondents to pay Petitioner's claims in the total amount of $217,967.75, and denying the remaining relief sought in the petition, including Petitioner's request for mandamus relief compelling Respondents to calculate and pay Petitioner for the total remaining overburden reimbursements owed. Petitioner's right to mandamus relief is clear. Upon declaring Section 61 unconstitutional, Supreme Court eliminated the only batTier to compelling Respondents to satisfy their mandatory and ministerial statutory duty to reimburse Petitioner for 100% of the county local share fund paid for the care of overburden-eligible recipients. Respondents do not dispute this point. Therefore, Supreme Court e11·ed in denying Petitioner mandamus relief compelling Respondents to satisfy their statutory reimbursement duty once and for all. Notwithstanding this Court's ruling on the constitutionality of Section 61, alternative grounds exist for awarding Petitioner mandamus relief. Section 61 does not expressly or implicitly repeal Respondents' unilateral reimbursement duty under Social Services Law § 368- a(l)(h), Petitioner's vested rights are preserved by General Constmction Law § 93 even if it does, and Respondents are barred from relying on Section 61 given their undisputed dilatory conduct intended to avoid paying Petitioner the overburden reimbursements. Under any of these theories, Petitioner's clear right to mandamus relief remains. Supreme Court therefore ell'oneously denied Petitioner's request for mandamus relief compelling reimbursement of the total outstanding overburden reimbursement liability, and this Court should modify the Supreme Court judgment accordingly. ARGUMENT SUPREME COURT ERRONEOUSLY DECLINED TO COMPEL RESPONDENTS TO REIMBURSE PETITIONER PURSUANT TO SOCIAL SERVICES LAW § 368-A Respondents do not dispute that their overburden reimbursement duty pursuant to Social Services Law § 368-a is mandatory, ministerial, and may be compelled in this proceeding if Petitioner establishes a clear right to legal relief. Instead, Respondents argue only that Section 61 extinguished Petitioner's clear right to reimbursement of 100% of the overburden local share payments made to DOH prior to January 1, 2006. Therefore, should this Court affirm that portion of Supreme Court's judgment declaring Section 61 unconstitutional, Petitioner's right to mandamus relief is Clear, and Respondents should be compelled to satisfy their statutory duty to calculate and reimburse Petitioner for the total remaining overburden liability pursuant to Social Services Law § 368-a, ending this dispute once and for all. Even in the absence of such a holding, however, Petitioner remains entitled to mandamus relief. A. The Plain Language of Section 61 Does Not Extingui~h Respondents' Underlying Reimbursement Obligation. Respondents argues, once again, that Section 61 extinguishes Respondents' clear and unambiguous duty under Social Services Law§ 368-a(l)(h) to reimburse Petitioner for 100% of the overburden local share payments made to DOH prior to January 1, 2006. Respondents' argument, however, is based upon a mistaken premise-that once DOH identified and paid overburden reimbursements to Petitioner for some, but not all, overburden-eligible recipients, its 2 statutory duty to identify and reimburse Petitioner for 100% of overburden-eligible recipients was at an end. Respondents' assertion flies in the face of the unambiguous language of Social Services Law§ 368-a(l)(h), which places the sole reimbursement duty on Respondents, has been rejected expressly by the Third Department, and should be rejected similarly by this Court (see Matter of County of St. Lawrence v Daines, 81 AD3d 212, 218 & n 2 [3d Dept 2011] ["no claim for overburden expense reimbursement need be submitted by a county. Rather, the state (which directly incurred the costs) identifies the reimbursement patients and unilaterally issues reimbursement to the county. Thus, ... a county need not take any action to receive reimbursement for overburden expenses under these circumstances"], lv denied 17 NY3d 703 [2011]). Although the Legislature appears to have intended, through Section 61, to eliminate the overburden reimbursement claims process, through which Petitioner and the other counties voluntarily could submit claims for reimbursement when it identified for Respondents overburden-eligible recipients for which it had not been reimbursed, in violation of section 368-a (R 4 73 ["Section 61 of the bill would . . . clarify that local governments cannot claim for overburden expenses il).curred prior to January 1, 2006" (emphasis added)]), the plain language of Section 61 does not repeal section 368-a or have any impact whatsoever on Respondents' unilateral duty to provide 100% reimbursement in accordance with the statutory command. Had the Legislature intended to repeal Respondents' Social Services Law § 368-a reimbursement duty in its entirety, or at the very least for the period prior to January 1, 2006 at issue here, it was required to state so expressly (see Cimo v State of New York, 306 NY 143, 148-149 [1953] ["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"]; Pines v State of New York, 115 AD3d 80, 97-98 [2d 3 Dept 2014] .["The 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" (internal quotation marks omitted)], appeal dismissed 23 NY3d 982 [2014]). Instead, Section 61 is directed only at the voluntary reimbursement claims process that DOH set up to allow Petitioner and the other counties to assist Respondents in satisfying their unilateral duty. The voluntary claims process, however, is legally irrelevant to the question of whether section 368-a(l)(h) has been repealed by implication. Indeed, since section 368-a(l)(h) was enacted, it has always been Respondents' unilateral duty to identify and reimburse Petitioner for 100% of the local share payments attributable to overburden-eligible recipients. Respondents' establishment of the voluntary claims process does not, and cannot, alter that statutory mandate. Whether the Legislature failed to recognize the legal significance of the Social Services Law§ 368-a(l)(h) statutory reimbursement duty, misunderstood that the counties have no obligation to submit reimbursement claims, or otherwise mistakenly assumed that elimination of the voluntary claims process would extinguish the State's reimbursement debt does not alter the necessary conclusion that the plain language of Section 61 simply does not accomplish what Respondents suggest was intended. Thus, Respondents' lmilateral reimbursement duty remains, and Petitioner is entitled to mandamus relief notwithstanding Section 61. B. Section 61 Retroactively Deprives Petitioner of its Vested Property Right to Reimbursement in Violation of General Construction Law § 93. Respondents make no attempt to distinguish or otherwise undermine the Third Department's rationale in Matter of County of St. Lawrence v Shah (95 AD3d 1548 [3d Dept 2012]), where the Court expressly held that even if the Legislature intended to repeal Social Services Law § 368-a(l)(h), as Respondents claim was intended here, the 2010 Amendment 4 "cannot serve to relieve the state of its obligation to refund the counties for these expenditures made prior to January 1, 2006" (id. at 1554). As the Third Department aptly reasoned: since 1982, it 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 2010 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 (id. at 1553). The same is true of Section 61. Contrary to Respondents' argument, the New York Constitution, in fact, prohibits retroactive impairment of Petitioner's vested rights to reimbursement because, as this Court and the Third Department have recognized, the local share payments were made, and the transactions completed, at a time when Social Services Law § 368-a(l)(h) guaranteed 100% reimbursement of overburden expenditures, well before the April 1, 2012 effective date of Section 61. An implicit repeal of the statutory reimbursement duty, even if intended, therefore, "shall not affect or impair any act done, offense committed or right accruing, accrued or acquired, or liability, penalty, forfeiture or punishment incurred prior to the time such repeal takes effect" (General Construction Law § 93). As the Third Department properly recognized in St. Lawrence, application of General Constrnction Law § 93 here to preserve Petitioner's entitlement to the refund of the county funds erroneously paid to DOH in the overburden local share could not be clearer. Indeed, the courts of this State harbor "a singular distrust of retroactive statutes" such as Section 61, especially where, as here, the only justification provided for the impainnent is the State's budgetary desire to avoid its accrued debts and Petitioner and the other counties are not provided any reasonable grace period in accordance with due process (James Sq. Assoc. LP v Mullen, 21 NY3d 233, 246, 5 249-250 [2013] [internal quotation marks and citation omitted]; see also Brothers v Florence, 95 NY2d 290, 301 [2000]). Respondents must therefore be compelled to reimburse Petitioner for the entire overburden liability in accordance with Social Services Law § 368-a(l )(h). C. Alternatively, the Special Facts Exception Bars Respondents from Relying on Section 61 to Deny Petitioner's Overburden Reimbursement Claims. Respondents argue that Petitioner's submission of claims identifying for Respondents certain overburden-eligible individuals for whom overburden reimbursement was not paid, after years of Respondents' failing to do so on their own, somehow defeats application of the special facts exception, because the reimbursement claims were submitted after Section 61 became effective on April 1, 2012 (Resps' Reply Br., at 11). This argument is premised upon a fundamental misstatement of the critical date for the special facts exception analysis. As this Court has held in prior litigation between these parties, Petitioner's entitlement to reimbursement vested long before Section 61 was enacted (see Matter of County of Herkimer v Daines, 60 AD3d 1456, 1457 [4th Dept 2009] [recognizing that prior to the enactment of the Medicaid Cap Statute, the county had rendered services in accordance with the law in existence at the time, and those transactions were complete], lv denied 63 AD3d 1672 [4th Dept 2009], lv denied 13 NY3d 707 [2009]; Matter of County of Niagara v Daines, 60 AD3d 1460, 1461 [4th Dept 2009], lv denied 63 AD3d 1672 [4th Dept 2009], lv denied 13 NY3d 708 [2009]; see also Matter of County of Niagara v Daines, 91AD3d1288, 1288-1289 [4th Dept 2012], Iv denied 94 AD3d 1481 [4th Dept 2012]; County of St. Lawrence v Daines, 81 AD3d at 216 [holding that "prior to 2006, upon payment to DOH for services provided to overburden patients for which no local share was owing, [the county's] right to reimbursement for such expenditures accrned[,] ... the transactions were complete and reimbursement was owed"]). Thus, Petitioner's submission of reimbursement claims to prompt Respondents to take some action to perform their statutory 6 reimbursement duty, which was not expressly or implicitly repealed by Section 61, in no way precludes application of the special facts exception. Furthermore, Respondents' suggestion that frivolous litigation conduct or bad faith is necessary for application the special facts exception badly misconstrues the doctrine. To the contrary, the Court of Appeals has unquestionably extended its application to cases involving only negligent delay (see e.g. Matter of Faymor Dev. Co. v Board of Stds. & Appeals of City of NY., 45 NY2d 560, 566 [1978] [holding that the government "may ... be estopped from claiming the benefits of its own inaction, whether intentional or merely negligent" (emphasis added)]; Matter of Amsterdam-Manhattan Assoc. v Joy, 42 NY2d 941, 942 [1977] ["Even in the absence of bad faith, administrative procrastination of this magnitude, be it negligent or willful, without excuse or justification, affords a basis for applying the pre-existing regulation to the applications" (emphasis added)]). Indeed, as the Second Department cogently held in Matter of Our Lady of Good Counsel R.C. Church & School v Ball (45 AD2d 66 [2d Dept 1974], affil 38 NY2d 780 [1975]): The rule that willful delay by a governmental agency or employee exempts the applicant from the onerous strictures of an amendment of a statute, or of a new statute, is one based on fairness and equity. It would be no less unfair to penalize an innocent and diligent license applicant because delay was due to negligent rather than willful norifeasance. (id. at 73 [emphasis added]). Thus, even if Respondents' decades-long campaign to avoid their overburden reimbursement obligation (by failing to make any effort to identify overburden- eligible individuals and/or to calculate their liability for reimbursements) is considered merely negligent conduct, this negligent conduct is more than sufficient to enforce the Social Services Law§ 368-a reimbursement obligation as it existed when Petitioner's rights vested. 7 Nor does Petitioner seek to invalidate Section 61 tlu·ough application of the special facts exception here, as Respondents suggest. The special facts exception is a factually specific equitable doctrine that is applied on a case-by-case basis, and is only applied where a petitioner submits evidence of intentional or negligent dilatory conduct by an administrative agency (see e.g. Faymor, 45 NY2d at 566 [reciting the numerous facts supporting application of the special facts exception]). Contrary to Respondents' argument, application of the doctrine to preclude Respondents from denying Petitioner's reimbursement claims based on the evidence of Respondents' intentional or, at the very least, negligent dilatory conduct concerning Petitioner's right to reimbursement does not extend to invalidate Section 61 as it applies to any other county. Instead, it is each county's obligation to establish independently that Respondents engaged in such conduct with respect to the county. Petitioner has satisfied that burden here. Notably, Respondents do not dispute that they took the actions on which Petitioner bases its claim to invoke the special facts exception (see Pet's Br., at 42-43; see also Resps' Reply Br., at 14-17), but merely asse1t that those actions do not amount to bad faith conduct. When viewed in concert, however, Respondents' campaign to avoid their overburden reimbursement duty and then extinguish it entirely by legislative fiat amounts to negligent administrative delay sufficient to invoke the exception. For thirty years, Respondents were content to collect Petitioner's local share payments of county funds, half-heaitedly attempt to identify some, but not all, overburden-eligible recipients for reimbursement, contrary to the terms of Social Services Law § 368-a, and then foist their unilateral reimbursement duty upon Petitioner and the other counties by "ma[king] available administrative procedures pursuant to which counties could have submitted overburden claims before 2006" (Resps' Reply Br., at 16, 18-19). Notably, however, even under the voluntary 8 claims process that Respondents tout as somehow absolving them of satisfying their statutory duty, there has not been a time since April 2005-eight months before the effective date of the Medicaid Cap Statute that Respondents claim extinguished Petitioner's right to reimbursement- that Respondents have paid reimbursement claims without being compelled to do so by this Court and others following protracted litigation. Nor were the reports provided to the counties adequate to identify all overburden-eligible recipients for whom reimbursement had not been paid, as Respondents claim. The reports and data that Respondents provided do not list or otherwise disclose which individuals Respondents improperly failed to code as overburden, or provide any other notice to Petitioner that certain individuals either had not been properly coded or had been decoded (R 438-441, 458, 499-501). It was impossible, therefore, for Petitioner and the other counties to identify the unpaid overburden reimbursement from the pro forma rep01is that Respondents provided (R 499-500), and Respondents' unilateral reimbursement duty was not satisfied even if Petitioner had had equal access. Simply stated, when viewed together, the record amply supp01i application of the special facts exception here to preclude Respondents from relying on Section 61 to deny Petitioner the overburden reimbursements to which it is unquestionably entitled. Supreme Court therefore erred in denying Petitioner mandamus relief compelling Respondents to calculate and pay Petitioner for the total remaining overburden reimbursements owed. CONCLUSION For the foregoing reasons, Petitioner respectfully requests that this Court modify the Order and Judgment of Supreme Court, Chautauqua County by compelling Respondents to satisfy their statutory reimbursement duty under Social Services Law § 368-a and, as so 9 modified, affim1 the judgment in its entirety, and award Petitioner such other and further relief as this Court deems just and proper. Dated: September 26, 2014 Albany, New York By: WHITEMAN OSTERMAN & HANNA LLP C·6 Christopher E. Buckey, Esq. Robert S. Rosborough IV, Esq. Monica R. Skanes, Esq. One Commerce Plaza Albany, New York 12260 (518) 487-7600 NANCY ROSE STORMER, P.C. Nancy Rose Stormer, Esq. Michael Bagge, Esq. 1325 Belle Avenue Utica, New York 13501 (315) 797-0110 Attorneys for Respondent/Appellant 10