State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: January 8, 2015 518222 

________________________________

In the Matter of COUNTY OF

CHEMUNG,

Respondent,

v MEMORANDUM AND ORDER

NIRAV R. SHAH, as Commissioner

of Health, et al.,

Appellants.

________________________________

Calendar Date: November 17, 2014

Before: Peters, P.J., Rose, Egan Jr. and Lynch, JJ.

__________

Eric T. Schneiderman, Attorney General, Albany (Victor

Paladino of counsel), for appellants.

Whiteman Osterman & Hanna, LLP, Albany (Christopher E.

Buckey of counsel) and Nancy Rose Stormer, PC, Utica (Nancy Rose

Stormer of counsel), for respondent.

__________

Lynch, J.

Appeal from a judgment of the Supreme Court (O'Shea, J.),

entered November 21, 2013 in Chemung County, which granted

petitioner's application, in a combined proceeding pursuant to

CPLR article 78 and action for declaratory judgment, to, among

other things, annul a determination of respondents' denying

petitioner's claims for certain Medicaid reimbursements.

Petitioner commenced this combined CPLR article 78

proceeding and declaratory judgment action seeking, in part, to

annul a determination of respondent Department of Health

(hereinafter DOH) denying its May 2013 claim for reimbursement of
-2- 518222 

pre-2006 overburden expenditures pursuant to Social Services Law

§ 368-a. Supreme Court, among other things, granted the petition

to annul DOH's determination and compelled respondents to

reimburse petitioner for the pending claims, as well as all

remaining overburden reimbursements that may still be due

pursuant to Social Services Law § 368-a (1). Respondents appeal.

At issue is the constitutionality of the April 1, 2012

amendment to the so-called Medicaid Cap Statute (see L 2005, ch

58, § 1, part C, § 1), which purported to immediately bar any

further claims of counties for reimbursement of overburden

expenses (see L 2012, ch 56, § 1, part D, § 61) (hereinafter the

2012 amendment). On November 26, 2014, this Court decided, in

Matter of County of St. Lawrence v Shah (___ AD3d ___, 2014 NY

Slip Op 08278 [2014]), that the 2012 amendment was not

unconstitutional, and we established a six-month grace period

from the date of the decision authorizing "any social services

district to file a claim for reimbursement of any pre-2006

overburden expenditures, with the 2012 amendment barring as

untimely any claims submitted thereafter" (id. at *3). We also

determined that "Supreme Court did not err in directing DOH to

identify, verify and pay the total unpaid overburden expenditures

that petitioner incurred prior to 2006" (id.).1

Applied here, these principles confirm that Supreme Court

properly granted petitioner's application, except insofar as the

court declared the 2012 amendment unconstitutional. We also note

that, as in Matter of the County of St. Lawrence v Shah (supra),

respondents' challenge to petitioner's capacity to bring this

claim was waived by respondents' failure to raise capacity as a

defense in their answer or a pre-answer motion to dismiss (id. at

*2).

Peters, P.J., Rose and Egan Jr., JJ., concur.

1 At oral argument counsel acknowledged that this matter

involves the same issue presented in Matter of County of St.

Lawrence v Shah (supra).
-3- 518222 

ORDERED that the judgment is modified, on the law, without

costs, by reversing so much thereof as declared L 2012, ch 56,

§ 1, part D, § 61 to be unconstitutional; it is declared that L

2012, ch 56, § 1, part D, § 61 is constitutional with a grace

period of six months commencing November 26, 2014; and, as so

modified, affirmed.

ENTER:

Robert D. Mayberger

Clerk of the Court