| Matter of County of St. Lawrence v Shah |
| 2012 NY Slip Op 03922 [95 AD3d 1548] |
| May 17, 2012 |
| Appellate Division, Third Department |
| 2—In the Matter of County of St. Lawrence,Respondent, v Nirav R. Shah, as Commissioner of Health, et al.,Appellants. |
—[*1] Whiteman, Osterman & Hanna, L.L.P., Albany (Christopher E. Buckey of counsel), forrespondent.
Kavanagh, J. Appeal from a judgment of the Supreme Court (Demarest, J.), entered August22, 2011 in St. Lawrence County, which granted petitioner's application, in a proceedingpursuant to CPLR article 78, to annul a determination of respondent Commissioner of Healthdisallowing petitioner's claims for Medicaid reimbursements.
As of December 2010, petitioner had submitted three claims to respondent Department ofHealth (hereinafter DOH) seeking reimbursement for certain payments, known as overburdenexpenditures, that it made to the state for Medicaid services provided to certain mentally disabledrecipients (see Social Services Law § 368-a [1] [h]; Matter of Spano v Novello, 13 AD3d1006, 1007-1008 [2004], lv denied 4 NY3d 819 [2005]). DOH rejected each of theseclaims because it interpreted a 2010 amendment to the Medicaid Cap Statute (see L 2005,ch 58, § 1, part C, as amended by L 2006, ch 57, § 1, part A, § 60) asrepealing Social Services Law § 368-a (1) (h) and thereby relieving it of the obligation toreimburse petitioner for these overburden expenditures (see L 2010, ch 109, § 1,part B, § 24). In response to this determination, petitioner commenced this CPLR article 78proceeding seeking payment of these claims, all of which accrued prior to January 1, 2006 andtotaled $28,716. Supreme Court granted the petition and ordered [*2]respondents to reimburse petitioner for these expenditures, and thisappeal by respondents ensued.
Medicaid is a government-funded health program that provides medical services toindividuals with low incomes and limited resources (see Matter of Nazareth Home of the Franciscan Sisters v Novello, 7NY3d 538, 542 [2006]). In New York, it is administered by DOH and is funded by subsidiesreceived from federal, state and local governments (see Social Services Law §368-a [1] [d]). By 1982, the expense born by counties in New York for their share of the cost ofMedicaid had significantly increased due, in part, to the deinstitutionalization of certain mentallydisabled persons and the medical services they required upon being relocated in the community(see Matter of Krauskopf v Perales, 139 AD2d 147, 148 [1988], affd 74 NY2d730 [1989]). Recognizing that counties needed financial assistance to meet this obligation, theLegislature enacted the Human Service Overburden Law in 1982, thus spawning the termoverburden expenditures. This statute made the state fully responsible for each county's share ofMedicaid expenditures incurred in providing medical services to these mentally disabledrecipients and required the state to reimburse the county for any payments it made for theseoverburden expenditures (see Social Services Law § 368-a [1] [h]). It is thisobligation imposed on the state by this statute—the full payment of the nonfederal share ofmedical services provided to certain mentally disabled individuals—and how it has beenaffected by a 2010 amendment to the Medicaid Cap Statute that is at issue in this proceeding(see L 2010, ch 109, § 1, part B, § 24).
In 2006, the Medicaid Cap Statute was enacted for the singular purpose of providing countieswith relief from the financial burdens imposed upon them by Medicaid. Before the Medicaid CapStatute was enacted, the federal government paid 50% of the medical costs incurred underMedicaid, while the state and counties, as a general rule, each paid a 25% share of theseexpenses. The Medicaid Cap Statute altered this funding formula by, in effect, limiting eachcounty's liability to the net Medicaid expenditures it made in 2005 with adjustments for inflationand other so-called trend factors (see L 2005, ch 58, § 1, part C, §1).[FN1]After the cap went into effect, the state took the position that it was no longer obligated toreimburse counties for overburden expenditures incurred prior to January 1, 2006. Petitioner, andothers, challenged the denial of these claims in CPLR article 78 proceedings, and numerouscourts declared that the state was still obligated to reimburse the counties for these expendituresthat occurred prior to January 1, 2006, or before the effective date of the Medicaid CapStatute[FN2](see Matter of County of St. Lawrence vDaines, 81 AD3d 212, 214-215 [2011], lv denied 17 NY3d 703 [2011]; Matter of County of Herkimer vDaines, 60 AD3d 1456, 1457 [2009], lv denied 13 NY3d 707 [2009]; Matter of County of Niagara v Daines,60 AD3d 1460, 1461 [2009], lv denied 13 NY3d 708 [2009]).
While litigation was pending, the Legislature, in 2010, amended the Medicaid Cap Statute toprovide that "the state/local social services district relative percentages of the non-[*3]federal share of medical assistance expenditures incurred prior toJanuary 1, 2006 shall not be subject to adjustment on and after July 1, 2006" (L 2010, ch 109,§ 1, part B, §§ 24, 40).[FN3]In effect, this amendment locked in a county's percentage share for the cost of Medicaid servicesat the figure calculated under the cap and prohibited any adjustment in that percentage after July1, 2006.[FN4]After this amendment took effect, respondents once again claimed that the state was no longerrequired to reimburse counties for these overburden expenditures because such a refund wouldresult in an alteration of each county's "percentage of the non-federal share" for Medicaidexpenditures made prior to January 1, 2006 in violation of this statute. Distilled to its essence,respondents' claim is that if a county was given a refund for these expenditures, it would, ineffect, have paid less for Medicaid prior to January 1, 2006 and its Medicaid liability ascalculated under the cap would thereby be reduced. For reasons that follow, we do not agree, andaffirm the judgment of Supreme Court requiring respondents to reimburse petitioner foroverburden expenditures that it incurred prior to January 1, 2006.
We begin by noting, as respondents concede, that the 2010 amendment—and itslegislative history—make no reference to the state's obligation to reimburse counties foroverburden expenditures that accrued prior to January 1, 2006 or the court decisions declaringthat this obligation was not altered or affected by the Medicaid Cap Statute. Moreover, theamendment, by its terms, does not explicitly repeal Social Services Law § 368-a (1) (h) orthe regulations promulgated by DOH to implement it (see 18 NYCRR 601.1 etseq.). In the absence of such a clear and unequivocal indication by the Legislature that itintended to repeal Social Services Law § 368-a (1) (h), respondents argue that the 2010amendment, by implication, effectively invalidated that statute and relieved the state of theobligation to pay overburden expenditures because it prohibits, after July 1, 2006, any adjustmentof the percentage share of what a county pays for Medicaid under the cap.
Initially, we note that "[r]epeal by implication is distinctly not favored in the law[,]" and acourt "should not lightly infer that the Legislature has repealed one if its own enactments when ithas failed to do so expressly" (Alweis v Evans, 69 NY2d 199, 204 [1987]). Here,respondents have presented no rationale for why the Legislature, if it intended to repeal SocialServices Law § 368-a (1) (h) and relieve the state of the underlying obligation, did not doso explicitly either in the 2010 amendment or in the legislative history that preceded itsenactment. The fact that the Legislature did not speak to this issue is, in our view, made evenmore telling given the financial [*4]implications that wouldnecessarily result from such a finding. All agree that much more is at stake in this proceedingthan the $28,716 sought by petitioner in its petition. As respondents' expert acknowledged, if allthe counties and social service districts in this state submitted "such reimbursement claims, thetotal amount of reimbursement would dwarf the amount . . . claimed to date." In ourview, it makes no sense that the Legislature would enact such an amendment intending to repealan existing statute knowing that to do so would have profound financial consequences for allinvolved and not announce that intention at some point in the legislative process.
We also reject respondents' position that the 2010 amendment and Social Services Law§ 368-a (1) (h) as they relate to overburden expenditures are inherently inconsistent andcannot coexist with each other. In that regard, "a statute is not deemed impliedly modified by alater enactment 'unless the two are in such conflict that both cannot be given effect. If by any fairconstruction, a reasonable field of operation can be found for [both] statutes, that constructionshould be adopted' " (Matter of Consolidated Edison Co. of N.Y. v Department of Envtl.Conservation, 71 NY2d 186, 195 [1988], quoting People v Newman, 32 NY2d 379,390 [1973], cert denied 414 US 1163 [1974]; accord Matter of Independence PartyState Comm. v New York State Bd. of Elections, 297 AD2d 459, 461 [2002]). This isespecially true in cases involving statutes relating to the same subject matter, as these must be "'read together and applied harmoniously and consistently' " (Matter of Independence PartyState Comm. v New York State Bd. of Elections, 297 AD2d at 461, quoting Alweis vEvans, 69 NY2d at 204; see Matterof M.B., 6 NY3d 437, 447 [2006]). Here, as petitioner argues, and Supreme Courtagreed, the two provisions—Social Services Law § 368-a and the 2010amendment—as they relate to the state's obligation to reimburse counties for theseexpenditures are compatible and can be interpreted to achieve legislative objectives that are notinherently inconsistent with each other. Specifically, the 2010 amendment can be read to barreimbursement for overburden expenditures that accrued after January 1, 2006—orthe first date that counties operated under the cap—while Social Services Law §368-a can be interpreted as requiring the state to reimburse petitioner for any such expendituresthat accrued prior to that date (see Matter of County of St. Lawrence v Daines, 81AD3d at 215).
As for respondents' contention that their interpretation of this amendment is entitled todeference, we note that the phrase "relative percentages of the non-federal share of medicalassistance expenditures incurred prior to January 1, 2006" is not a highly technical term or aconcept that implicates respondents' operating practices or procedures. Instead, it refers to whatpetitioner and the state paid for Medicaid expenditures prior to January 1, 2006 and, as applied tothe issues raised in this proceeding, involves a question of "pure statutory reading and analysis"for which deference is not required (Matter of Belmonte v Snashall, 2 NY3d 560, 566 [2004]).Moreover, the affidavit submitted by respondents interpreting the 2010 amendment and itsimpact on the state's obligation to pay these overburden expenditures was prepared long after theamendment was enacted and is not supported by any relevant legislative history as to theconclusions contained therein (seeMatter of County of Niagara v Daines, 91 AD3d 1288, 1290 [2012]).
We also note that respondents' argument challenging the continued validity of SocialServices Law § 368-a (1) (h) as it applies to overburden expenditures is dependent entirelyupon a finding that, if the state is required to reimburse petitioner for these expenditures, thepercentage calculation of petitioner's Medicaid obligation under the cap would necessarily beaffected. However, the cap calculation is based on what a county's net Medicaid expenditures[*5]were in 2005. A refund made years later does not alter thatbaseline computation or change what the counties paid for these expenditures prior to January 1,2006. In addition, the 2010 amendment, by its terms, allows the state to recoup from a countycertain expenditures for Medicaid that were subsequently disallowed by the federal governmentbecause of the county's failure to properly administer the program (see L 2010, ch 109,§ 1, part B). This "clawback provision" bars respondents from using these paymentsobtained from the counties to recalculate a county's net Medicaid expenditures made prior toJanuary 1, 2006 and thus compel an increase in a county's Medicaid liability under the cap.Locking in a county's percentage share of what it pays for medical expenses covered byMedicaid—and not allowing any adjustment that would ultimately affect what it owes forMedicaid under the cap—serves an important purpose; it provides counties with somefinality in terms of their annual Medicaid liability and, at the same time, assists each county inmaking accurate financial projections in the budgetary process (see Senate Introducer'sMem in Support, Bill Jacket, L 2010, ch 109, at 8). For the same reason, the 2010 amendmentbars any adjustment of this percentage when a county receives reimbursement for overburdenexpenditures made prior to January 1, 2006. In that circumstance, the 2010 amendment preventsa county from claiming that the reimbursement of these expenditures has reduced what thecounty paid for Medicaid in 2005, thus reducing its liability under the cap.
Finally, since 1982, it has been the state's statutory obligation to pay the county share forMedicaid expenditures incurred in providing medical services to certain mentally disabledindividuals. While the state, and not the county, has been obligated to pay for these medicalservices, it has continued to charge petitioner for these expenses and used these funds to satisfyits obligations under this statute. Since the state was never entitled to these funds, the 2010amendment, even if found to apply to overburden expenditures, cannot serve to transform thesecounty funds into state property and relieve the state of the legal obligation to return them.General Construction Law § 93 provides that "[t]he repeal of a statute or part thereof shallnot affect or impair any . . . right accruing, accrued or acquired, or liability. . . incurred prior to the time such repeal takes effect, but the same may be enjoyed,asserted, [or] enforced . . . as fully and to the same extent as if such repeal had notbeen effected." This Court has previously held that "prior to 2006, upon payment to DOH forservices provided to overburden patients for which no local share was owing, petitioner's right toreimbursement for such expenditures accrued" (Matter of County of St. Lawrence vDaines, 81 AD3d at 216). Thus, the 2010 amendment, even if it was intended by theLegislature to repeal Social Services Law § 368-a (1) (h), cannot serve to relieve the stateof its obligation to refund the counties for these expenditures made prior to January 1, 2006(see Matter of County of Niagara v Daines, 91 AD3d at 1290).
Rose, J.P., Spain, Malone Jr. and McCarthy, JJ., concur. Ordered that the judgment isaffirmed, without costs.
Footnote 1: The trend factors are 3.5% in2006, 3.25% in 2007 and 3% each year thereafter, all to be calculated based upon the counties'net medical expenditures for 2005.
Footnote 2: The state subsequently paidmore then $6 million to satisfy these claims.
Footnote 3: Social Services Law § 61provides that "[f]or the purpose of administration of public assistance and care the state shall bedivided into county and city social services districts as follows: 1. The city of New York ishereby constituted a city social services district. 2. Each of the counties of the state not includedin subdivision one of this section is hereby constituted a county social services district"(see Social Services Law § 2 [7]).
Footnote 4: July 1, 2006 was selected as thedate after which the adjustment could not be made because the Medicaid Cap Statute did notrequire DOH to determine a county's 2005 base-year Medicaid expenditure until June 30, 2006(see L 2005, ch 58, § 1, part C, as amended by L 2006, ch 57, § 1, part A,§ 60).