Opinion ID: 718736
Heading Depth: 2
Heading Rank: 3

Heading: The State Litigation.

Text: 17 On February 1, 1995, the New York Council for Exceptional People (an unincorporated association whose members are parents and guardians of TCF recipients) and three of the plaintiffs here (collectively, NYCEP) filed an Article 78 petition (used to challenge New York State administrative actions) against OMRDD Commissioner Maul. The petition, filed in New York State Supreme Court in the County of New York, alleged that OMRDD was about to eliminate or alter the administrative procedures for effecting in-state placement of TCF recipients, in violation of the TCF Statute, other New York statutes, and the TCF recipients' constitutional rights to procedural and substantive due process. 18 Late that month, NYCEP filed a lawsuit in the same court, seeking a declaratory judgment prohibiting the City and State from terminating transitional care. On March 31, 1995, NYCEP filed a Restated Verified Second Amended Petition and a Restated Verified Complaint. NYCEP's new pleadings sought relief that would (1) forbid the City from withdraw[ing] from the TCF Program, or (2) require the State to assume 100% funding of transitional care expenses. NYCEP's claims in that lawsuit were based on New York State's constitution, the TCF Statute, and the January 31, 1995 Memorandum of Understanding between the HRA and the OMRDD. 19 On April 10, 1995, the state court granted judgment in favor of the defendants/respondents in the Article 78 proceeding, except on the due process claims and a statutory challenge, which the plaintiffs/petitioners were permitted to pursue in post-hearing Article 78 proceedings. 5 The court also severed the remaining claim for a declaratory judgment as to future funding from the Article 78 proceeding. New York Council for Exceptional People v. Pataki, No. 102684/95 (N.Y.Sup.Ct.N.Y.County April 10, 1995). 20 Meanwhile, on May 30, 1995, the City notified the guardians that its $1.116 million had run out, and that the City would terminate transitional care on June 1, 1995. 21 The state court issued a ruling in the declaratory judgment action on June 13, 1995. Justice Freedman held that neither the TCF Statute, the State constitution, nor the Memorandum of Understanding entitles the client plaintiffs to City or State funding. 6 New York Council for Exceptional People v. Pataki, No. 102684/95, slip op. at 9 (N.Y.Sup.Ct.N.Y.County June 13, 1995). The Appellate Division unanimously affirmed in October, --- A.D.2d ----, 632 N.Y.S.2d 531, 531 (1st Dep't 1995); on February 20, 1996, the New York Court of Appeals denied leave to appeal. Mo. No. 14 (N.Y. Feb. 20, 1996) (unpublished slip op.) 22 Since we conclude that the judgment in the state litigation has substantial res judicata effects on most of the claims on which the preliminary injunction in this case is based, we outline the state court decision in some detail. The court described the funding crisis and its potential adverse effects on the plaintiffs as follows: 23 In drafting the [TCF] Statute, it appears that the State legislature and then Governor Cuomo did not anticipate that a locality would withdraw from the transitional care program that had been in effect since 1982, and thus did not foresee that the Statute's provisions, as set forth in Soc.Serv.Law §§ 466(2) and (6), created a potential funding gap for four years until 1999. The Statute mandates that the State increase its reimbursement from 50% to 60% of locality expenditures as of 1995, and take over direct funding of the TCF Program as of 1999: but a loophole permits the State to expend no monies at all for the plaintiff clients. A locality's withdrawal form the TCF Program before 1999 results in certain clients being left without any funding source at all, whereas clients still in transitional care as of 1999 are assured State funding. This situation is inconsistent with the overarching funding scheme, which establishes an otherwise orderly plan for phasing out transitional care so as to minimize disruption and hardship to clients, and under which the State assumes an increasing portion of Program costs over time. 24 Defendants' abrupt cessation of funding may jeopardize the welfare of particularly vulnerable citizens of this State. 25 New York Council for Exceptional People v. Pataki, No. 102684/95, slip op. at 10-11 (N.Y.Sup.Ct.N.Y.County June 13, 1995). The court also summarized plaintiffs' contentions: 26 Plaintiffs do not concede that the City has a right to withdraw from the TCF Program, but argue that the State is obligated under the Statute to assume responsibility for all TCF Program costs for City residents which the City does not cover. To hold otherwise, plaintiffs claim, would thwart the legislature's intent for the State to assume over time the entire cost of the TCF Program. Plaintiffs point out that from 1982 through 1994, the State had been reimbursing localities for 50% of costs. Under the Statute, the State must now reimburse at a 60% rate, and take over all funding in 1999. Plaintiffs conclude that the Statute is flexible enough to impose full State responsibility prior to 1999, or that the prior 1982-1994 program indicates the intent of coverage if the statute is silent on the issue of premature locality withdrawal. Plaintiffs' Memorandum of Law at 8. 27 Id. at 5. In granting the defendants' summary judgment motion and denying the plaintiffs' motion, the state court held:Social Services law § 466(2) provides that localities may participate in the TCF Program, for which they will receive reimbursement from the State. [Emphasis in original.] The only possible interpretation of this language is that the localities' participation is voluntary and a condition precedent to any State obligations. Inasmuch as the City has withdrawn from the TCF Program, there is nothing to reimburse, and accordingly the State has no current duty to contribute any monies to the client plaintiffs' transitional care. 28 In any event, Section 16 of the Statute is dispositive of plaintiffs' motion. That provision unambiguously states that no provision of the statute shall be construed to create for any individual a right, interest or entitlement to services, funds or placement. In view of this pronouncement, this Court cannot deem the State to be the guarantor of the client plaintiffs' transitional care funding. 29 Id. (emphasis added). 30