This opinion is uncorrected and subject to revision before

publication in the New York Reports.

-----------------------------------------------------------------

No. 136 

In the Matter of County of 

Chemung,

 Respondent,

 v.

Nirav R. Shah, &c., et al.,

 Appellants.

---------------------------

No. 137 

In the Matter of County of 

St. Lawrence,

 Respondent,

 v.

Nirav R. Shah, &c., et al.,

 Appellants.

(And Two Other Related 

Proceedings.)

---------------------------

No. 138 

In the Matter of County of 

Chautauqua,

 Appellant,

 v.

Nirav R. Shah, &c., et al.,

 Respondents.

---------------------------

No. 139 

In the Matter of County of 

Jefferson,

 Appellant,

 v.

Nirav R. Shah, &c., et al.,

 Respondents.

---------------------------

No. 140 

In the Matter of County of 

Oneida,

 Appellant,

 v.

Nirav R. Shah, &c., et al.,

 Respondents.

---------------------------
No. 141 

In the Matter of County of 

Genesee,

 Appellant,

 v.

Nirav R. Shah, &c., et al.,

 Respondents.

---------------------------

No. 142 

In the Matter of County of 

Cayuga,

 Appellant,

 v.

Nirav R. Shah, &c., et al.,

 Respondents.

---------------------------

No. 143 

In the Matter of County of 

Monroe,

 Appellant,

 v.

Nirav R. Shah, &c., et al.,

 Respondents.

Case Nos. 136 and 137:

Victor Paladino, for appellants.

Christopher E. Buckey, for respondent.

City of New York; New York State Association of

Counties, amici curiae.

Case Nos. 138, 139, 140, 141, 142 and 143:

Christopher E. Buckey, for appellant.

Victor Paladino, for respondents.

City of New York; New York State Association of

Counties, amici curiae.

RIVERA, J.:

In these appeals, several counties challenge the

constitutionality of Section 61 of the 2012 amendment (L 2012, ch

56 § 1, part D, § 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

- 1 -
- 2 - Nos. 136-143

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.

I.

Medicaid is a federal program that provides medical

services to low-income individuals with limited resources (see

generally Visiting Nurse Serv. of NY Home Care v NY State Dept.

of Health, 5 NY3d 499, 503 [2005]; 42 USC § 1395 et seq.). The

program is jointly funded by the federal government and the

states (42 USC §§ 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

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- 3 - Nos. 136-143

the federal government (id.). Unreimbursed expenses are shared

between the State and fifty-eight 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 percent of Medicaid

services provided to recipients who were eligible for overburden

reimbursement.2

1 The exception is New York City, whose five counties are

constituted as a single social service district (Social Services

Law § 61).

2 The Department of Health (DOH): "shall review the

expenditures made by social services districts for medical

assistance for needy persons, and the administration thereof,

before making reimbursement . . . . If approved by the [DOH],

such expenditures . . . shall be subject to reimbursement by the

state in accordance with this section and the regulations of the

[DOH] as follows: (h)(i) Beginning January first, 1984, one

hundred per centum of the amount expended for medical assistance

for those individuals who are eligible . . . as a result of a

mental disability as determined by [state officials] after first

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- 4 - Nos. 136-143

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 2006 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

deducting therefrom any federal funds properly received or to be

received on account thereof" (Social Services Law § 368-a [1] [h]

[i]).

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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 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" (County of St. Lawrence v Daines, 81

AD3d 212, 214 [3d Dept 2011], lv denied 17 NY3d 703 [2009]; see

also County of Herkimer v Daines, 60 AD3d 1456, 1457 [4th Dept

2009], lv denied 13 NY3d 707 [2009]; County of Niagara v Daines,

60 AD3d 1460, 1461 [4th Dept 2009], lv denied 13 NY3d 708

[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

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- 6 - Nos. 136-143

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 pre2006 claims (see County of St. Lawrence v Shah, 95 AD3d 1548,

1548 [3d Dept 2012]; County of Niagara v Daines, 91 AD3d 1288,

1290 [4th Dept 2012], lv denied 94 AD3d 1481 [2009]). 

While these appeals were pending, the Legislature

enacted Section 61 of the 2012 Executive Budget Law (Section 61),

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:

"to clarify that local governments cannot claim for

overburden expenses incurred prior to January 1, 2006

when the 'local cap' statute that limited local

contributions to Medicaid expenditures took effect. 

This is necessary to address adverse court decisions

that have resulted in State costs paid to local

districts for pre-cap periods, which conflict with the

original intent of the local cap statute."

(Mem in Support of 2012-13 NY Executive Budget, Health and Mental

Hygiene art VII Legis, at 18 [2012]). When the 2012 Amendment

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- 7 - Nos. 136-143

was passed, overburden claims could be up to twenty-eight years

old.

Shortly before the April 1st effective date, St.

Lawrence and Chemung Counties submitted claims for millions of

dollars of pre-2006 overburden reimbursements. DOH paid these

claims in 2012 but rejected claims from several upstate Counties,

including additional claims from St. Lawrence and Chemung

Counties submitted after April 1, 2012.

St. Lawrence County commenced three combined CPLR

article 78 proceedings and actions for declaratory judgment (for

each claim rejected by DOH). The County sought to annul DOH's

decision to deny reimbursement for claims submitted after April

1, 2012 as arbitrary and capricious and to compel DOH to approve

and pay the claims. It further requested that the court declare

Section 61 unconstitutional for depriving the County of its

vested property rights, and impose a constructive trust over the

funds that DOH was allegedly obligated to reimburse. DOH moved

and the County cross-moved for summary judgment on the

declaratory judgment and state law claim. Supreme Court

concluded that the County had a vested right to reimbursement for

the overburden expenditures which could not be extinguished. It

declared Section 61 unconstitutional, annulled DOH's denials of

the County's claims, and directed DOH to pay the claims submitted

by the County (Matter of St. Lawrence v Shah, Sup Ct, St Lawrence

County, July 31, 2013, Demarest, J., index No 140712). Supreme

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- 8 - Nos. 136-143

Court also granted the County's request for mandamus relief and

held that DOH has a unilateral obligation to calculate and

reimburse the County for the pre-2006 overburden expenditures. 

The Third Department modified Supreme Court's order,

and held Section 61 constitutional, construing it as a statute of

limitations that did not extinguish the Counties' substantive

rights but merely ended the time for submission of their claims. 

As a matter of procedural due process, the Court imposed a sixmonth grace period from the date of its decision for submission

of the Counties' pre-2006 claims (County of St. Lawrence v Shah,

124 AD3d 88, 92-93 [3d Dept 2014]). The court also upheld the

grant of mandamus relief, which required DOH to identify, verify

and pay all overburden expenditures incurred by the County before

2006 (id. at 94).

In the summer of 2013, Chemung County commenced a

combined CPLR article 78 proceeding and action for declaratory

judgment seeking similar relief to that sought in the St.

Lawrence litigation. Supreme Court held in Chemung County's

favor on the reasoning of the decision in the St. Lawrence

proceedings. On appeal, the Third Department applied its St.

Lawrence decision and reached the same conclusion (County of

Chemung v Shah, 124 AD3d 963 [3d Dept 2015]). 

Shortly before the decision in St. Lawrence, the Fourth

Department held in an article 78 proceeding and declaratory

judgment action commenced by Niagara County, that Section 61

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- 9 - Nos. 136-143

applies retroactively to extinguish the pre-2006 overburden

claims. However, the court remitted for consideration of any

properly alleged State challenges to the County's argument that

Section 61 violated due process by extinguishing its vested

rights in the claims (County of Niagara v Shah, 122 AD3d 1240

[4th Dept 2014]).

Before a decision was rendered on that issue in the

Niagara County litigation, and in nearly identical actions

commenced by Chautauqua County and Jefferson County, the Fourth

Department held that the State waived its defense that the

Counties' lacked capacity to assert constitutional challenges

against the State and State legislation. However, the court

determined that the Counties were not persons within the meaning

of the due process clauses of the federal and state

constitutions, and therefore failed to establish the

unconstitutionality of Section 61 (County of Chautauqua v Shah,

126 AD3d 1317 [4th Dept 2015]; County of Jefferson v Shah, 126

AD3d 1322 [4th Dept 2015]; County of Oneida v Shah, 128 AD3d 1381

[4th Dept 2015]; County of Genesee v Shah 128 AD3d 1380 [4th Dept

2015]; County of Cayuga v Shah, 129 AD3d 1503 [4th Dept 2015];

County of Monroe v Shah, 129 AD3d 1505 [4th Dept 2015]). Those

Counties appealed to this Court.

We granted the State leave to appeal in County of

Chemung v Shah (124 AD3d 963 [3d Dept 2015]) and County of St.

Lawrence (124 AD3d 88 [93d Dept 2014]) to resolve the divergence

- 9 -
- 10 - Nos. 136-143

and apparent conflict in the Appellate Division (County of

Chemung v Shah, 25 NY3d 903 [2015]; County of St. Lawrence v

Shah, 25 NY3d 903 [2015]).

II.

On appeal to us, the Counties assert that they possess

constitutionally protected vested rights in the unpaid funds

which cannot be extinguished by retroactive application of

Section 61 without violating their due process rights. Under

this interpretation of the statutory scheme, the Counties have no

burden to demand payment and the State must pay any overburden

reimbursements due under Social Services Law § 368-a (1) (h) (i),

regardless of whether the Counties submitted claims before April

1, 2012, or at any time thereafter. This would mean that the

State has an ongoing obligation, terminated only by payment of

outstanding reimbursements, irrespective of the age of the claim. 

Alternatively, the Counties argue Section 61 may be

interpreted to avoid any constitutional deficiencies as a statute

of limitations that sets a deadline for the submission of claims

without extinguishing the Counties' substantive rights, but that

the deadline set forth in Section 61 must be extended to provide

an adequate period in which to submit their remaining claims. 

Lastly, the Counties argue that mandamus relief is not only

appropriate but necessary to compel the State's compliance with

its statutory duty under Social Services Law § 368-a. 

The State responds that the Counties fail to present a

- 10 -
- 11 - Nos. 136-143

viable due process challenge to the constitutionality of Section

61. The State argues the Counties are neither "persons"

guaranteed due process in the constitutional sense, nor are they

holders of any rights in a particular form of medicaid

allocation. Regardless, according to the State, the Counties

have not been unfairly harmed by its decision to replace one

Medicaid expense repayment system with another because the Cap

Statute provides greater financial benefits to the counties. The

State maintains that the legislature responded to the rapidly

increasing Medicaid costs with a ceiling on the counties'

financial exposure, essentially providing them with a fixed

dollar amount rather than a fixed percentage of overall costs. 

Under the Cap Statute, the total amount the counties could pay

was limited, but part of this legislative "deal" was that the

counties would be required to pay their full cap amount each

year, without any credit for reimbursements owed. The State also

claims that the Counties lack a clear legal right to the mandamus

relief granted here, specifically a massive, retrospective review

by the State of twenty-two years of Medicaid expenditures.

The litigation posture of these appeals presents

insurmountable obstacles to our consideration of some of the

State's objections to the Counties' ability to pursue its

challenge to Section 61. As the State concedes, it waived any

argument that the Counties are without capacity to sue the State

under the general rule that municipalities are "creatures or

- 11 -
- 12 - Nos. 136-143

agents of the State," without authority to "contest the actions

of their principal or creator affecting them in their

governmental capacity or as representatives of their inhabitants"

(City of NY v State of NY, 86 NY2d 286, 290 [1995]; see also

Williams v Mayor, 289 US 36, 40 [1933]). The State's waiver

encompasses any challenge to the Counties' argument that they

hold a proprietary interest in the overburden reimbursements (see

City of NY, 86 NY2d at 291-292). The State also failed to

preserve its argument that the Counties lack a substantive due

process right to the monies they now claim because the

municipalities are not persons within the meaning of the federal

and state due process clauses.

We now turn to the merits of the Counties' challenge to

the State's interpretation of Section 61. Five principles guide

our analysis. First, "[i]t is well settled that acts of the

Legislature are entitled to a strong presumption of

constitutionality" (Cohen v Cuomo, 19 NY3d 196, 201 [2012]). 

This presumption can only be overcome when it can be shown beyond

a reasonable doubt that it conflicts with a fundamental law, and

"until every reasonable mode of reconciliation of the statute

with the constitution has been resorted to, and reconciliation

has been found impossible" (In re Fay, 291 NY 198, 207 [1943]). 

Second, "statutes relating to the same subject matter . . . must

be read together and applied harmoniously and consistently"

(Alweis v Evans, 69 NY2d 199, 204 [1987]). Third, we aim to

- 12 -
- 13 - Nos. 136-143

effectuate the intent of the Legislature, and the clearest

indicator of legislative intent is the plain meaning of the

statutory language (Majewski v Broadalbin-Perth Cent. Sch. Dist.,

91 NY2d 577, 583 [1998]). Fourth, any claim can be time barred,

including constitutional claims (Block v North Dakota ex. rel Bd.

of Univ. & Sch. Lands, 461 US 273, 292 [1983]). Fifth, extensive

arguments about a cost allocation scheme's economic and political

wisdom is outside the scope of judicial review (Jeter v

Ellenville Cent. Sch. Dist., 41 NY2d 283, 287 [1977]). As the

Supreme Court has held, 

"[w]hether the enactment is wise or unwise, whether it

is based on sound economic theory, whether it is the

best means to achieve the desired result, whether, in

short, the legislative discretion within its prescribed

limits should be exercised in a particular manner, are

matters for the judgment of the legislature, and the

earnest conflict of serious opinion does not suffice to

bring them within the range of judicial cognizance." 

(Chicago, B & QR Co. v McGuire, 219 US 549, 569 [1911]). 

In other words, the counties cannot challenge the State's

decision to prospectively reallocate Medicaid payments.

With these principles in mind, we are able to resolve

these appeals without deciding between the parties' competing

positions as to whether Section 61 extinguishes substantive

claims, or merely sets forth the outer temporal limit during

which counties may challenge the State's initial overburden

payment determination to seek additional reimbursement. If we

assume, arguendo, that the counties have a vested right to any

reimbursements that accrued before 2006, then under any possible

- 13 -
- 14 - Nos. 136-143

theory presented in these appeals, Section 61 is constitutional. 

By its express language that "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," Section 61 terminates the

submission of pre-2006 claims past its effective date. This

legislatively-mandated cutoff date was a response to judicial

misinterpretations of prior statutory efforts to end the claims

process which was administratively instituted by DOH under the

State's former Medicaid allocation regime (Mem in Support of

2012-13 NY Executive Budget, Health and Mental Hygiene art VII

Legis, at 18 [2012][Section 61 necessary to address adverse court

decisions that conflict with statute's original intent]). Once

the State complied with its statutory obligation under Social

Services Law § 368-a (1) (h) (i) to pay the counties for

overburden reimbursements, it was fully consistent with the prior

mandatory reimbursement scheme for the Legislature to impose a

deadline on claims for unpaid funds. That deadline was neither

in conflict with a fundamental law nor our constitutional

principles. Just as the Counties cannot be heard to complain

that the Legislature replaced one Medicaid allocation scheme with

another, thus redefining the counties' expense burden, so too are

the counties without recourse when the Legislature imposes a

deadline on the counties' submission of claims for overburden

reimbursements, thereby closing the door on pre-2006 claims.

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- 15 - Nos. 136-143

There is also no merit to the Counties' claim that

procedural due process mandates that Section 61 be extended

beyond its effective date in order to protect their vested rights

in any unpaid funds. It is well established that procedural due

process guarantees notice and an opportunity to be heard before a

claimant is deprived of liberty or a recognized property interest

(Matter of Quinton A., 49 NY2d 328, 334 [1980]). "[N]o one rule

as to the length of time which will be deemed reasonable can be

laid down for the government of all cases alike. Different

circumstances will often require a different rule. What would be

reasonable in one class of cases would be entirely unreasonable

in another" (McGahey v Commonwealth of Virginia, 135 US 662, 707

[1890]). The question distills to what is reasonable under the

circumstances (Terry v Anderson, 95 US 628, 633 [1877]). In

deciding the Counties' argument for additional time to submit

claims, our analysis focuses on the overburden reimbursement

claims process, the litigation following the enactment of the Cap

Statute, and the question of whether the counties have been

denied the opportunity to pursue claims before enactment of the

statutory prohibition on submissions.

As the record establishes, as far back as 1988 the

counties were on notice under Social Services Law § 368-a (1) (h)

(i) and the State's regulations that the State was obliged to pay

overburden reimbursements, and that the counties could pursue

claims for any amounts they believed they were still owed after

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- 16 - Nos. 136-143

payment. The counties had information available to pursue those

claims in the decades leading up to the passage of Section 61. 

For years, the counties knew on a weekly basis the amount the

State was taking to satisfy the counties' local share of Medicaid

expenses, and the State provided the counties with quarterly

reports and other documents by which the counties could determine

if they had a potential claim. Only after the enactment of the

Cap Statute, and in reliance of its interpretation that the

legislature thereby set for the counties a fixed, non-reducible

maximum payment, did the State categorically reject claims

submitted after 2006. The dispute over these claims spawned

close to a decade of litigation in the Appellate Division,

involved numerous counties, and resulted in the eventual payment

of all outstanding claims. Armed with the success of this

litigation, while still aware of the State's continued efforts to

close the door on pre-2006 claims, the counties continued to

submit more claims as the effective date of Section 61

approached. Given this history, we cannot say that the counties

did not have notice of the claims process or an opportunity to

seek reimbursement for claims, including those going back over

twenty years. 

Moreover, as the Counties recognize, they have no claim

to the continuation of the former overburden reimbursement system

in perpetuity because the State acted well within its authority

to reallocate Medicaid spending under a new legislative

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- 17 - Nos. 136-143

framework, as it did with the passage of the Cap Statute (L 2005,

ch 58, § 1, part C, § 9, as amended by L 2006, ch 57, § 1, part

A, § 60). Notably, the Cap Statute provides significant

financial benefit to the counties, and does not place them in a

demonstrably worse position than under the overburden

reimbursement claims process. As the State contends, and the

Counties do not dispute, the counties saved billions of dollars

in the years following the enactment of the Cap Statute.

Our analysis must also give weight to the judgment of

the Legislature that claims should be extinguished with the

enactment of the budget on April 1, 2012 (Terry, 95 US at 633). 

As the State argues, this deadline furthers the State's

significant interest in the stability of its finances and the

budgeting process.

Under the unique circumstances of this case we do not

consider the deadline set by the Legislature repugnant to due

process. Therefore, there is no basis to extend the time for

submission of pre-2006 claims beyond the years previously

available to the counties and the date set forth in Section 61.3

3 The Counties' reliance on Brothers v Florence (95 NY2d 290

[2000]), in support of their request for a "grace period" beyond

the legislative deadline is misplaced. Even treating Section 61

as a statute of limitations, the appeals before us require that

we consider the history and relationship between the Counties and

the State. Unlike the potential claimants in Brothers, the

Counties have twice avoided legislative attempts to end the

submissions process, and by the State's undisputed estimate, the

counties have already been paid approximately 98% of their

claims. Therefore, the Counties' demand for more time is not

- 17 -
- 18 - Nos. 136-143

III.

We also conclude that mandamus relief is unwarranted.

This Court has repeatedly stated that mandamus is an

"extraordinary remedy" that is "available only in limited

circumstances" (Klostermann v Cuomo, 61 NY2d 525, 537 [1984]). 

"Mandamus is used to enforce an administrative act positively

required to be done by a provision of law" (Walsh v La Guardia,

269 NY 437, 441 [1936]). It is considered extraordinary because

the judiciary is loathe to interfere with the Executive

Department's exercise of its official duties, unless the

Department has failed to perform a specific act (id.) Here, DOH

made its initial determinations and reimbursed counties

quarterly, and then paid out all claims submitted prior to the

April 1, 2012 deadline. The Social Services Law requires no more

and the Counties are not entitled to this relief. Moreover,

ordering mandamus is inconsistent with our conclusion that

Section 61 is constitutional.

IV.

Accordingly, in Matter of County of Chemung and Matter

of County of St. Lawrence, the orders insofar as appealed from

should be reversed, without costs, the petitions dismissed in

their entirety and a declaration made in favor of respondents

Nirav R. Shah, &c., et al. that section 61 of part D of Chapter

supported here.

- 18 -
- 19 - Nos. 136-143

56 of the Laws of 2012 has not been shown to be unconstitutional;

in Matter of County of Chautauqua, Matter of County of Jefferson,

Matter of County of Oneida, Matter of County of Genesee, Matter

of County of Cayuga, and Matter of County of Monroe, the orders

insofar as appealed from should be affirmed, without costs.

- 19 -
M/O County of Chemung v Shah

No. 136-143 

GARCIA, J.(concurring):

While I am in general agreement with the result arrived

at by the majority, I reach that conclusion by a somewhat

different analysis that I believe is more in line with the unique

facts and procedural issues we confront here.

These cases present the conflicting interpretations of

Section 61 by the Third and Fourth Departments. The Third

Department held that Section 61 did not retroactively extinguish

the counties' right to reimbursement for certain Medicaid

overpayments -- or "overburden expenses" -- under Social Services

Law § 368-a (1) (h) and instead that court treated Section 61 as

a statute of limitations on the payment of claims for pre-2006

reimbursement (see County of St. Lawrence v Shah, 124 AD3d 88 [3d

Dept 2014]). In light of this interpretation, the Third

Department imposed a six-month grace period for the submission of

reimbursement claims and granted mandamus relief requiring the

Department to identify, calculate, and pay outstanding overburden

expenses. Conversely, the Fourth Department held that Section 61

unequivocally extinguished the counties' right to pre-2006

reimbursement but later held that the counties could not

challenge this action on due process grounds, despite the New

- 1 -
- 2 - Nos. 136-143

York State Department of Health's (DOH) waiver of the capacity

defense, because they lack the "personhood" necessary to do so

(see County of Niagara v Shah, 122 AD3d 1240 [4th Dept 2014];

County of Chautaqua v Shah, 126 AD3d 1317 [4th Dept 2015]). I

would reject the Third Department's interpretation of Section 61

as a statute of limitations, adopt the Fourth Department's

interpretation of the statute but reject its personhood analysis,

and hold that the statute is constitutional under a vested due

process rights analysis. 

With respect to the Fourth Department's determination

that Section 61 extinguishes the counties' right to

reimbursement, I agree that Section 61 evinces a clear intent to

foreclose any pre-2006 reimbursement claim. The language

explicitly states that the statute is being enacted

"notwithstanding" Social Services Law § 368-a (1) (h). As a

result, "no reimbursement shall be made for social services

districts' claims submitted on or after [the amendment's

effective date] for district expenditures incurred prior to

January 1, 2006 [including overburden expenditures]" (L 2012, ch

56, § 1, part D, § 61). 

This interpretation of the plain language of the

statute is likewise supported by the tortured litigation history

that led to its enactment. The Legislature first enacted the

Medicaid Cap Statute (Cap Statute) in 2006, and litigation ensued

following its passage. After courts determined that the Cap

- 2 -
- 3 - Nos. 136-143

Statute did not extinguish the counties' right to

reimbursements,1 the Legislature passed an amendment in 2010

stating that "the state/local social services district relative

percentages of the non-federal share of medical assistance

expenditures incurred prior to January 1, 2006 shall not be

subject to adjustment on or after July 1, 2006" (L 2010, ch 109,

pt B, § 204). DOH's interpretation of this amendment as barring

the counties' right to pre-2006 overburden reimbursements led to

a new round of litigation, again resulting in opinions holding

that the amendment did not extinguish DOH's obligation to pay

these reimbursement claims. This litigation history prompted the

passage of Section 61. Clearly, the Legislature was not imposing

a new time limit for filing claims: the intent was to extinguish

those claims and end this process. 

Where the language of a statute directs us to ignore a

specific prior statute in addition to "any other contrary

provision of law," it is unnecessary to "harmonize" the two

statutes. Accordingly, the Third Department's interpretation of

Section 61 as a statute of limitations was error. Nor is such a

reading warranted to make the statute constitutional because, for

1 It is unclear what the majority means in casting these

decisions as "judicial misinterpretations" (majority op. at 14);

none of the relevant lower court decisions were reviewed by this

Court (see e.g. County of Herkimer v Daines, 60 AD3d 1456 [4th

Dept], lv denied, 13 NY3d 708 [2009]; County of St. Lawrence v

Daines, 81 AD3d 212, 214-216 [3d Dept], lv denied, 17 NY3d 703

[2011]). 

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- 4 - Nos. 136-143

the reasons discussed below, Section 61 is constitutional under a

vested due process rights analysis. 

Turning to the issue of whether in extinguishing the

claims the Legislature violated due process, it is necessary to

address the threshold issue of capacity of the counties to bring

this suit. New York strictly adheres to the rule that

"municipalities lack the capacity to bring suit to invalidate

State legislation" (City of New York v State of New York, 86

NY2d 286, 290 [1995]). Nor is it at all clear that plaintiffs

here would have fit their claims within one of the narrow

exceptions to that general rule, such as proprietary interest in

a specific fund of moneys (id. at 291-292). Nevertheless,

capacity, a waivable defense, was concededly waived here2 (see

City of New York, 86 NY2d at 292). I would reject the Fourth

Department's interpretation of our case law as requiring the

demonstration of an additional, undefined "personhood"

requirement as a prerequisite to sue on due process grounds. The

only support given for this interpretation is the reference to a

"substantive right" to raise constitutional matters in Jeter v

2 The majority's conclusion that the State waived any

challenge to the counties' argument that they fit within an

exception to the capacity defense misses the point (majority op.

at 12). The State has forfeited the right to assert that the

counties lack the capacity to sue the State. The counties still

need to demonstrate some form of due process interest requiring

constitutional protection; however, it need not be the narrow

"proprietary interest" necessary to overcome a properly asserted

capacity defense. 

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- 5 - Nos. 136-143

Ellenville Central School District (41 NY2d 283, 287 [1977]), but

a fair reading of that case demonstrates that the concern was

capacity, not "personhood." As a result, we can assume under the

unique facts of this case that the counties had a vested property

right in the refund of money spent to cover costs properly

allocated to the State (see Alliance of Am. Insurers v Chu, 77

NY2d 573, 585-86 [1991]). 

 The waiver of the capacity defense and the

determination that there is no additional personhood requirement,

and an assumption that a vested property right exists in refunds

owed, makes necessary a vested due process rights analysis to

determine whether Section 61 is constitutional. This

straightforward analysis examines "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"

(Alliance of Am. Insurers, 77 NY2d at 586). 

I would uphold the statute's constitutionality on the

basis of such an analysis. The new payment system of Section 61

provides some financial benefit to the counties in exchange for

extinguishing the prior claims and in this way treats the

counties fairly. The fact that those counties might disagree

with the financial calculation is immaterial. Moreover, the

economic or political wisdom of that calculation is beyond our

review (see Jeter, 41 NY2d at 287). The counties had no right to

rely on the pre-existing payment system. Since the Cap Statute

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- 6 - Nos. 136-143

was enacted in 2005, the counties were on notice of changes in

the reimbursement regime, and years of litigation and failed

statutory amendments demonstrated DOH's plain intent to

extinguish pre-2006 reimbursement claims. The statute is

minimally retroactive, applying only to those pre-2006 claims

that were not brought by 2012. Moreover, Section 61 serves the

public interest in overhauling a system fraught with error and

inefficiencies that still saw uncertainty with respect to the

amount of outstanding claims -- some potentially going back

decades.

Enactment of Section 61 extinguishing the counties'

pre-2006 claims was not unconstitutional. Because there is no

need to read in any "statute of limitations," there is also no

need to provide a grace period or grant mandamus relief. 

Accordingly, I agree with the Fourth Department's interpretation

of Section 61 as extinguishing the counties' right to pre-2006

reimbursement, and hold that there was no due process violation

in that legislative action. 

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- 7 - Nos. 136-143

* * * * * * * * * * * * * * * * *

For Case No. 136: Order, insofar as appealed from, reversed,

without costs, petition dismissed in its entirety and a

declaration made in favor of respondents Nirav R. Shah, &c., et

al. that section 61 of part D of Chapter 56 of the Laws of 2012

has not been shown to be unconstitutional. Opinion by Judge

Rivera. Chief Judge DiFiore and Judges Pigott and Abdus-Salaam

concur. Judge Garcia concurs in result in a separate concurring

opinion. Judges Stein and Fahey took no part.

For Case No. 137: Order, insofar as appealed from, reversed,

without costs, petitions dismissed in their entirety and a

declaration made in favor of respondents Nirav R. Shah, &c., et

al. that section 61 of part D of Chapter 56 of the Laws of 2012

has not been shown to be unconstitutional. Opinion by Judge

Rivera. Chief Judge DiFiore and Judges Pigott and Abdus-Salaam

concur. Judge Garcia concurs in result in a separate concurring

opinion. Judges Stein and Fahey took no part.

For Case Nos. 138, 139, 140, 141, 142 and 143: Order, insofar as

appealed from, affirmed, without costs. Opinion by Judge Rivera. 

Chief Judge DiFiore and Judges Pigott and Abdus-Salaam concur. 

Judge Garcia concurs in result in a separate concurring opinion. 

Judges Stein and Fahey took no part.

Decided October 27, 2016

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