Law Requiring Approval Before Health Care Facility Withdraws or Transfers Assets Held Valid

In a full-fledged opinion by Judge Lippman, the Court of Appeals reversed the lower courts and found that Public Health Law 2808(5)(c), which requires the Commissioner of Health’s approval before a residential health care facility withdraws or transfers more than three percent of its assets, did not violate substantive due process and did not delegate legislative authority to the Commissioner:

The lower courts, we believe, erred in concluding that the subject statute was offensive to substantive due process. Economic regulation will violate an individual’s substantive due process property interest only in those situations, vanishingly rare in modern jurisprudence, where there is absolutely no reasonable relationship to be perceived between the regulation and the achievement of a legitimate governmental purpose …; the regulation, to be actionable, must be arbitrary in the constitutional sense — which is to say “so outrageously arbitrary as to constitute a gross abuse of governmental authority”  … . * * *

Plaintiffs’ alternative theory for deeming § 2808 (5) (c) unconstitutional — that the provision’s catch-all phrase effects an improper delegation of legislative policy-making power — is not, in our view, more viable than their substantive due process claim.    * * * The enumerated criteria clearly tie the Commissioner’s disposition of an equity withdrawal application to the financial condition of the facility and its quality of care record.  These are highly pertinent and not excessively general criteria and it is reasonably clear, and in any case conceded by defendants, that the catch-all’s immediately subsequent reference to “such other factors” does not authorize application dispositions based on criteria that are generically different.  Brightonian Nursing Home… v Daines…, 161, CtApp 10-15-13