Cnty. of Chemung v. Shah
| Decision Date | 27 October 2016 |
| Citation | 66 N.E.3d 1044,2016 N.Y. Slip Op. 07043,28 N.Y.3d 244,44 N.Y.S.3d 326 |
| Parties | In the Matter of COUNTY OF CHEMUNG, Respondent, v. Nirav R. SHAH, M.D., M.P.H., as Commissioner of the New York State Department of Health, et al., Appellants. In the Matter of County of St. Lawrence, Respondent, v. Nirav R. Shah, M.D., M.P.H., as Commissioner of the New York State Department of Health, et al., Appellants. (And Two Other Related Proceedings.) In the Matter of County of Chautauqua, Appellant, v. Nirav R. Shah, M.D., M.P.H., as Commissioner of the New York State Department of Health, et al., Respondents. In the Matter of County of Jefferson, Appellant, v. Nirav R. Shah, M.D., M.P.H., as Commissioner of the New York State Department of Health, et al., Respondents. In the Matter of County of Oneida, Appellant, v. Nirav R. Shah, M.D., M.P.H., as Commissioner of the New York State Department of Health, et al., Respondents. In the Matter of County of Genesee, Appellant, v. Nirav R. Shah, M.D., M.P.H., as Commissioner of the New York State Department of Health, et al., Respondents. In the Matter of County of Cayuga, Appellant, v. Nirav R. Shah, M.D., M.P.H., as Commissioner of the New York State Department of Health, et al., Respondents. In the Matter of County of Monroe, Appellant, v. Nirav R. Shah, M.D., M.P.H., as Commissioner of the New York State Department of Health, et al., Respondents. |
| Court | New York Court of Appeals Court of Appeals |
Eric T. Schneiderman, Attorney General, Albany (Victor Paladino, Barbara D. Underwood and Andrew D. Bing of counsel), for appellants in the first and second above-entitled combined proceedings and actions and respondents in the second, third, fourth, fifth, sixth, seventh and eighth above-entitled combined proceedings and actions.
Whiteman Osterman & Hanna LLP, Albany (Christopher E. Buckey and Robert S. Rosborough IV of counsel), and Nancy Rose Stormer, P.C., Utica (Nancy Rose Stormer and Michael Bagge of counsel), for respondent in the first and second above-entitled combined proceedings and actions and appellant in the second, third, fourth, fifth, sixth, seventh and eighth above-entitled combined proceedings and actions, and Bond Schoeneck & King, PLLC, Utica (Raymond A. Meier of counsel), for appellant in the fifth and eighth above-entitled combined proceedings and actions.
Zachary W. Carter, Corporation Counsel, New York City (Michael Pfautz, Michael Pastor, Richard Dearing, Devin Slack and Brian Horan of counsel), for City of New York, amicus curiae.
Stephen J. Acquario, General Counsel, New York State Association of Counties, Albany and Friedman Kaplan Seiler & Adelman LLP, New York City (Katherine L. Pringle and Rebecca C. Serbin of counsel), for New York State Association of Counties, amicus curiae.
In these appeals, several counties challenge the constitutionality of the 2012 amendment (L. 2012, ch. 56, § 1, part D, § 61) (section 61) to the Medicaid Cap Statute (L. 2005, ch. 58, § 1, part C, § 1), which closes the door on reimbursement claims for a category of Medicaid disability expenses paid by the counties to the State prior to 2006. The current appeals are the latest round in a decade-long struggle between the counties and the State, during which the counties demanded payment after the state legislature restructured the Medicaid local-share payment system, and enacted a flat cap on total county Medicaid expenses. We are now faced with divergent departmental approaches to the resolution of the singular question underlying these proceedings: whether the State must consider and pay claims submitted after the effective date of the legislative deadline for pre–2006 reimbursement claims set forth in section 61. We conclude section 61 is constitutional, and that the State is under no further obligation to address outstanding county reimbursement claims filed after April 1, 2012, nor must the State initiate an administrative review of its records to identify and pay for any pre–2006 claims.
Medicaid is a federal program that provides medical services to low-income individuals with limited resources (see generally Matter of Visiting Nurse Serv. of N.Y. Home Care v. New York State Dept. of Health, 5 N.Y.3d 499, 503, 806 N.Y.S.2d 465, 840 N.E.2d 577 [2005] ; 42 U.S.C. § 1395 et seq. ). The program is jointly funded by the federal government and the states (42 U.S.C. §§ 1396a, 1396b ). In New York, the program is administered through the State Department of Health (DOH), and the State pays for covered medical services and, in turn, is partially reimbursed a specified percentage for these expenses by the federal government (id. ). Unreimbursed expenses are shared between the State and 58 local social services districts, which are coterminous with the State's counties (Social Services Law § 368–a [1 ][d] ).1
From 1984 until 2006 the State directly billed the counties for their respective local shares, which included costs for a category of medical services for certain Medicaid recipients for which the counties bore no financial responsibility, and for which they were entitled to repayment, known as "overburden reimbursements" (Social Services Law § 368–a [1 ][h] ). The State deposited the local share in a special escrow Medicaid fund maintained by the State Comptroller (Social Services Law § 367–b [14 ] ). As required by Social Services Law § 368–a (1)(h)(i), upon review by DOH of the local share, the State was obligated to pay the county 100% of Medicaid services provided to recipients who were eligible for overburden reimbursement.2
From 1984 to 2005, the State met its obligation to pay overburden reimbursements in two ways. First, DOH identified overburden reimbursement-eligible patients and paid the counties quarterly. Second, DOH instituted a process whereby counties could submit reimbursement claims for eligible patients overlooked by DOH (18 NYCRR 601.4; part 635 ). To assist with the claims process, DOH would send each county several reports that included the client identification number of each patient for which the county was entitled to reimbursement, the amount the county had originally paid for that patient's Medicaid expenditures, and the reimbursement amount. The State also made the adjudicated claims history file available to the counties, and it included details from 1984 onward regarding all Medicaid claims that DOH's fiscal agent paid for services provided to Medicaid recipients. Any county that believed it was owed a reimbursement based on its review of these reports could notify DOH in writing by letter or upon submission of a claim in accordance with DOH regulations.
In response to rising Medicaid costs and the fiscal burdens they imposed on the counties, in 2005 the legislature enacted the Medicaid Cap Statute (Cap Statute) to limit the counties' financial responsibility for Medicaid expenditures. The Cap Statute replaced the counties' fixed percentage of Medicaid expenses (for example, roughly 25%), with a maximum individualized county cap, based on the Medicaid expenditures made by or on behalf of each county during the 2005 base year, after deducting any overburden reimbursement payments made to the county.
Thereafter, DOH interpreted the Cap Statute as imposing a specific annual contribution amount on the counties that they could not reduce by seeking payment for outstanding overburden reimbursements, and DOH denied overburden reimbursement claims submitted after the enactment of the Cap Statute. Niagara, Herkimer, and St. Lawrence Counties each brought CPLR article 78 proceedings challenging the denials. Supreme Court granted the Counties partial relief and, when DOH appealed, the Appellate Division held that DOH's application of the Medicaid Cap Statute to the Counties' claims "constituted an impermissible retroactive application of the statute" (Matter of County of St. Lawrence v. Daines, 81 A.D.3d 212, 214, 917 N.Y.S.2d 330 [3d Dept.2011], lv. denied 17 N.Y.3d 703, 2011 WL 2473401 [2011] ; see also Matter of County of Herkimer v. Daines, 60 A.D.3d 1456, 1457, 876 N.Y.S.2d 303 [4th Dept.009], lv. denied 13 N.Y.3d 707, 2009 WL 3296528 [2009] ; Matter of County of Niagara v. Daines, 60 A.D.3d 1460, 1461, 874 N.Y.S.2d 924 [4th Dept.2009], lv. denied 13 N.Y.3d 708, 890 N.Y.S.2d 445, 918 N.E.2d 960 [2009] ).
On the heels of the Counties' success in the courts, the legislature enacted an amendment in 2010 that DOH interpreted as barring the Counties from seeking past overburden reimbursements. Another round of litigation ensued, and the Appellate Division ultimately rejected the State's statutory construction and annulled DOH's denials of overburden claims, concluding that the 2010 amendment did not clearly and unambiguously extinguish the State's obligation to pay the pre–2006 claims (see Matter of County of St. Lawrence v. Shah, 95 A.D.3d 1548, 1548, 1551–1553, 945 N.Y.S.2d 443 [3d Dept.2012] ; Matter of County of Niagara v. Daines, 91 A.D.3d 1288, 1290, 937 N.Y.S.2d 776 [4th Dept.2012], lv. denied 94 A.D.3d 1481, 944 N.Y.S.2d 712 [2012] ).
While these appeals were pending, the legislature enacted section 61 as part of the 2012–2013 executive budget, which 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" (L. 2012, ch. 56, § 1, part D, § 61 ). Section 61, which was proposed on January 17, 2012 and passed on March 30, 2012, had an effective date of April 1, 2012. According to the State Executive Budget Memorandum, section 61 was intended:
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