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Regulation Properly Promulgated—Analytical Criteria Described in Some Depth

In finding that a regulation promulgated by the Department of Health (DOH) was a valid exercise of regulatory authority, the Fourth Department noted that an agency need not rely on empirical studies when it adopts a regulation, but rather can rely on the expertise and experience of the agency.  The challenged regulation limited a specific type of Medicaid-reimbursement to nursing homes pending an audit:

…DOH had statutory authority to promulgate 10 NYCRR 86-2.40 (m) (10) under Public Health Law § 2808 (2-c) (d) and … the regulation was not ” out of harmony' with an applicable statute” … . Although section 2808 (2-c) (d) does not explicitly authorize prepayment audits of residential health care facilities, “an agency can adopt regulations that go beyond the text of that legislation, provided that they are not inconsistent with the statutory language or its underlying purposes” … . Moreover, we reject petitioners' contention that DOH usurped the role of the legislature by adopting 10 NYCRR 86-2.40 (m) (10). DOH has “inherent authority to protect the quality and value of services rendered by [Medicaid] providers” … and, therefore, we conclude that DOH did not “stretch[ ] [the enabling statute] beyond its constitutionally valid reach” by adopting a regulation that allows a prepayment audit of Medicaid claims under certain circumstances … .

…10 NYCRR 86-2.40 (m) (10) “has a rational basis and is not unreasonable, arbitrary or capricious” … . Contrary to petitioners' contention, DOH is not required to rely upon empirical studies when it adopts a regulation. “Although documented studies often provide support for an agency's rule making, such studies are not the sine que non of a rational determination” … . Thus, “the commissioner [of DOH] . . . is not confined to factual data alone but also may apply broader judgmental considerations based upon the expertise and experience of the agency he [or she] heads” … . Here, DOH adopted 10 NYCRR 86-2.40 (m) (10) to “[e]nsure the accuracy and integrity of Medicaid rates that are adjusted for case mix data” (NY Reg, Jan. 2, 2013, at 16), and we conclude that adoption of the regulation was within DOH's authority in order to ” assure[] that the funds which have been set aside for (providing medical services to the needy) will not be fraudulently diverted into the hands of an untrustworthy provider of services' ” … . Matter of Adirondack Health-Uijlein Living Ctr v Shah, 2015 NY Slip Op 01073, 4th Dept 2-6-15


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“Arbitrary and Capricious” Defined/Criteria for Elimination of a Public-Employee Position Explained

In affirming the school district's actions in creating a new position and eliminating an existing position, the Fourth Department explained the relevant review standards:

“The arbitrary or capricious test chiefly relates to whether a particular action should have been taken or is justified . . . and whether the administrative action is without foundation in fact' . . . Arbitrary action is without sound basis in reason and is generally taken without regard to the facts… . * * *

“It is well established that a public employer may abolish civil service positions for the purposes of economy or efficiency . . . , but it may not act in bad faith in doing so . . . , nor may it abolish positions as a subterfuge to avoid the statutory protection afforded civil servants before they are discharged . . . A petitioner challenging the abolition of his or her position must establish that the employer in question acted in bad faith” … . Matter of Ifedigbo v Buffalo Pub Schools, 2015 NY Slip Op 01125, 4th Dept 2-6-15


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Four-Month Statute of Limitations Starts Running When Administrative Agency’s Policy Change Is “Readily Ascertainable,” Not When Notice of the Policy Change Is Actually Received

The Third Department explained when the four-month statute of limitations begins to run when the triggering event is a policy memorandum issued by an administrative agency:

…[B]oth the statute and case law make clear that the statute of limitations period for a CPLR article 78 proceeding begins to run when “the determination to be reviewed becomes final and binding upon the petitioner” (CPLR 217 [1]…). Such determination, in turn, “becomes ‘final and binding’ when two requirements are met: completeness (finality) of the determination and exhaustion of administrative remedies. First, the agency must have reached a definitive position on the issue that inflicts actual, concrete injury and second, the injury inflicted may not be . . . significantly ameliorated by further administrative action or by steps available to the complaining party” … . In the context of quasi-legislative determinations such as the one at issue here, actual notice of the challenged determination is not required in order to start the statute of limitations clock; rather, the statute of limitations begins to run once the administrative agency’s “definitive position on the issue [becomes] readily ascertainable” to the complaining party … . Matter of School Adm’rs Assn of NY State v New York State Department of Civ Serv, 2015 NY Slip Op 00676, 3rd Dept 1-29-15

 

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Appellate Court Defers to Agency Interpretation of a Statute When Specialized Knowledge Required

The Third Department affirmed the State Budget Director’s determination that state employees normally not entitled to overtime pay are eligible for overtime pay if they worked more than 47.5 hours in a week as a result of Hurricane Sandy.  Petitioners sought overtime pay for those who worked more than 40 hours per week.  The Third Department explained when an appellate court must defer to the statutory interpretation made by a state agency (the court so deferred here):

Initially, we must determine whether the Budget Director’s interpretation of Civil Service Law § 134 (6) is entitled to deference. This Court will defer to the governmental agency responsible for the administration of a statute when interpretation of the language at issue requires the agency’s expertise in the matters covered by the statute, but will accord no such deference when “the question is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent” … . Although the Civil Service Law provides that the “workweek for basic annual salary” for employees who are eligible for overtime shall not exceed 40 hours (Civil Service Law § 134 [1]), overtime-ineligible employees are expressly excluded from the coverage of that section, and nothing else in the legislation defines the phrase “normal workweek” as used in Civil Service Law § 134 (6) for such employees or prescribes the number of hours contained in such a workweek. Under these circumstances, in our view, the number of hours in the “normal workweek” of an overtime-ineligible state employee necessarily implicates the Budget Director’s specialized knowledge of state employment practices and “involves knowledge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom” … . Accordingly, this Court will defer to the Budget Director’s determination and uphold it if it is not irrational or unreasonable … . Matter of Kent v Cuomo, 2015 NY Slip Op 00680, 3rd Dept 1-29-15

 

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Courts Should Not Defer to Zoning Board of Appeals’ Determination of a Purely Legal Question (the Meaning of a Town Code Provision)

The Third Department determined Supreme Court erred when it deferred to the zoning board of appeals’ (ZBA’s) interpretation of the town code (because the interpretation was a purely legal issue) and the ZBA erred in its interpretation of the code. The Third Department found that the word “dwelling” was encompassed by the word “building” and, therefore, the code provision at issue allowed the construction of 74 single family dwellings on petitioner’s (Boni’s) parcel:

Supreme Court erred in deferring to the ZBA’s interpretation of the zoning ordinance, and the ZBA erred in its interpretation of the Town Code as it pertains to the Boni parcel. Although courts generally grant deference to a zoning board of appeals regarding its determination, no deference is required if the issue is one of pure legal interpretation of the zoning law … . Because zoning ordinances are in derogation of common law, they must be strictly construed against the municipality that drafted them, and any ambiguity must be resolved in favor of property owners … . The Boni parcel is located in a B-1 zoning district, which has 18 listed permitted uses, including one- and two-family dwellings (see Town Code of the Town of Clifton Park § 208-32 [A] [14]). Pursuant to § 208-33 (B) of the Town Code, in a B-1 district, “[n]o preexisting building(s) shall be rehabilitated or remodeled or new building(s) constructed on a vacant lot to a size greater than 12% of the lot size, with no single building to have a maximum square footage exceeding 4,800 square feet. Multiple buildings on a lot are allowed as long as the overall density limitations of this article are not exceeded.”

Essentially, petitioners argue that the word “buildings” in the last sentence of § 208-33 (B) of the Town Code includes one-family dwellings, leading to the conclusion that the Town Code permits them to build multiple dwellings on the Boni parcel as long as they comply with the density limitations. * * *

We agree with respondents that respondent Town of Clifton Park probably never envisioned a landowner being able to build 74 one-family dwellings on a single, unsubdivided parcel in a business district. Nevertheless, the plain language of the Town Code, strictly construed against the municipality, must be interpreted as permitting multiple buildings — including one-family dwellings — on a single lot as long as they do not exceed the density limitations … . Matter of Boni Enters LLC v Zoning Bd of Appeals of the Town of Clifton Park, 2015 NY Slip Op 00428, 3rd Dept 1-15-15

 

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Exceptions to “Exhaustion of Administrative Remedies” Requirement Not Applicable—“Futility” and “Irreparable Harm” Not Demonstrated

The Third Department determined that petitioner (a nursing home) could not, via an Article 78 proceeding, involve the courts to contest the Department of Health’s (DOH’s) calculation of Medicaid reimbursement rates because petitioner did not first exhaust every available administrative remedy.  The exceptions to the exhaustion requirement, futility and irreparable harm, did not apply:

It is well settled that an administrative agency’s determination must be challenged through every available administrative remedy before it can be challenged in the courts … . The narrow exceptions to this requirement include, as relevant here, where an administrative challenge would be futile or the petitioner can demonstrate irreparable harm … . Neither exception has been demonstrated. Matter of Schenectady Nursing & Rehabilitation Ctr LLC, v Shah, 2015 NY Slip Op 00425, 3rd Dept 1-15-15

 

 

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Regulation Mandating a 25-Year Look-Back for Relicensing (Driver’s License) Is a Valid Exercise of the Department of Motor Vehicles’ Authority/Regulation Was Correctly Applied to Deny Petitioner’s Application for Relicensing

The Fourth Department determined the 25-year look-back for relicensing in the Department of Motor Vehicles regulations was a valid exercise of the department’s authority.  Under the regulation, the department was required to deny petitioner’s application for relicensing based upon his record:

We conclude that 15 NYCRR 136.5 [the 25-year look-back] is not legislative in nature, inasmuch as the Legislature delegated its authority to administer the relicensing process to the Commissioner of the Department of Motor Vehicles (see Vehicle and Traffic Law §§ 215 [a]; 510 [5], [6]…). Therefore, in promulgating 15 NYCRR part 136, the Commissioner has not “act[ed] inconsistently with the Legislature, or usurp[ed] its prerogatives” … . * * *

Here, within the 25 years preceding petitioner’s most recent revocable offense (see 15 NYCRR 136.5 [a] [4]), i.e., driving while intoxicated, petitioner has two other alcohol-related driving convictions, i.e., driving while intoxicated and driving while ability impaired, both under Vehicle and Traffic Law § 1192 (see 15 NYCRR 136.5 [a] [1] [i]). Furthermore, respondent properly concluded that petitioner committed a serious driving offense within the meaning of the regulation because the regulation defines a serious driving offense as occurring where a driver has accumulated “20 or more points from any violations” (15 NYCRR 136.5 [a] [2] [iv]), and petitioner had accumulated 21 points from other traffic violations. Respondent was therefore required to deny petitioner’s application for relicensing. Matter of Shearer v Fiala, 2015 NY Slip Op 00051, 4th Dept 1-2-15

 

 

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Regulation Prohibiting/Restricting Smoking in New York Parks Properly Promulgated by Office of Parks, Recreation and Historic Preservation—“Boreali” Criteria Explained and Applied to the Facts in Some Depth

Reversing Supreme Court, the Third Department, in a full-fledged opinion by Justice Peters, determined that a regulation prohibiting/restricting smoking in New York parks was properly promulgated by the Office of Parks, Recreation and Historic Preservation (OPRHP).  Petitioner, an organization promoting the interests of smokers, argued the agency did not have the authority to regulate smoking in parks absent legislation on the issue and, therefore, the promulgation of the rule violated the principle of separation of powers.  The court explained the “Boreali” criteria under which the regulation was analyzed and applied the criteria to the facts (the interesting, detailed, fact-specific analysis is not summarized here):

Respondents, the Office of Parks, Recreation and Historic Preservation (hereinafter OPRHP) and its Commissioner, are empowered by statute to “[o]perate and maintain . . . historic sites and objects, parks, parkways and recreational facilities”(PRHPL 3.09 [2]) and to “[p]rovide for the health, safety and welfare of the public using facilities under its jurisdiction” (PRHPL 3.09 [5]). In February 2013, pursuant to this statutory authority, OPRHP adopted a rule establishing smoke-free areas in certain limited outdoor locations under its jurisdiction (see 9 NYCRR 386.1). Such regulation, among other things, also prohibits smoking in each state park located in New York City, with limited exceptions (see 9 NYCRR 386.1 [a] [2])… . OPRHP announced that this rule was needed in order to allow “patrons to enjoy the outdoors, breathe fresh air, walk, swim, exercise and experience [s]tate [p]arks' amenities and programs without being exposed to secondhand tobacco smoke and tobacco litter” (NY Reg Dec. 5, 2012 at 11). * * *

“The cornerstone of administrative law is derived from the principle that the Legislature may declare its will, and after fixing a primary standard, endow administrative agencies with the power to fill in the interstices in the legislative product by prescribing rules and regulations consistent with the enabling legislation” (…see NY Const, art III, § 1). As the Court of Appeals has recently reaffirmed, when determining whether an administrative agency has violated the constitutional principle of separation of powers, we must consider the “coalescing circumstances” set forth in Boreali v Axelrod (71 NY2d 1, 11 [1987]), namely, (1) whether the respondents improperly engaged in the balancing of their stated goal with competing social concerns and acted “solely on [their] own ideas of sound public policy”; (2) whether the respondents engaged in the “interstitial” rulemaking typical of administrative agencies or instead “wrote on a clean slate, creating [their] own comprehensive set of rules without benefit of legislative guidance”; (3) whether the challenged regulation concerns “an area in which the Legislature ha[s] repeatedly tried — and failed — to reach agreement in the face of substantial public debate and vigorous lobbying by a variety of interested factions”; and (4) whether the respondents overstepped their bounds because the development of the regulation did not require the exercise of expertise or technical competence by the administrative agency (id. at 12-14 …). In determining whether “the difficult-to-define line between administrative rule-making and legislative policy-making has been transgressed,” this Court should view these circumstances “in combination” (Boreali v Axelrod, 71 NY2d at 11), while ever mindful that “'it is the province of the people's elected representatives, rather than appointed administrators, to resolve difficult social problems by making choices among competing ends'” … .

Applying the four Boreali considerations, we find no usurpation of the Legislature's prerogative by respondents' promulgation of 9 NYCRR 386.1. Matter of NYC C.L.A.S.H. Inc v New York State Off of Parks, Recreation & Historic Preserv, 2014 NY Slip Op 09085, 3rd Dept 12-31-14


 

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Plaintiff-Resident of an Adult Care Facility Did Not Have Standing to Object to An Informal Procedure Used by the Department of Health (DOH) Re: the Inspection of Adult Care Facilities (Affording a Meeting Between the Facility and DOH Prior to the Publication of an Inspection Report)—Standing to Challenge Governmental Action Discussed in Some Depth

The First Department determined that the plaintiff in a class action suit did not have standing to object to a procedure used by the Department of Health (DOH) re: its inspection of adult care facilities.  Plaintiff is a resident of an adult care facility. The DOH inspection review process (IRP) affords the operators of adult care facilities the opportunity for an informal one-hour meeting with DOH staff after an inspection report is drafted but before it is published.  Plaintiff alleged the informal meeting was not authorized by any regulation and hampered residents' rights re: grievances against a residential care facility:

Since plaintiff is challenging DOH's implementation of the IRP, a governmental action, he must establish that he has standing to do so by showing an “injury in fact,” meaning that plaintiff will actually suffer harm by the challenged administrative action and that the injury asserted by him falls “within the zone of interests or concerns sought to be promoted or protected by the statutory provision under which the agency has acted” … . The alleged injury or harm must also be in some way different from that of the public at large … .

Although plaintiff alleges that the IRP process favors adult home operators by allowing them to privately address adverse findings or corrective actions DOH identifies, without any input by residents of the adult home, plaintiff does not otherwise articulate how he is disadvantaged by this process, how the outcomes of some of these investigations would have been different had residents been permitted to participate in the IRP, or that the substandard living conditions or mistreatment he complains of are attributable to DOH's implementation of the IRP. The only “injury” plaintiff alleges is that resolution of residents' complaints are delayed when an adult home operator contests the outcome of an investigation and residents are not aware of or notified that any particular complaint is subject to an IRP. These allegations are far too generalized and speculative to satisfy the “injury in fact” requirement that would confer plaintiff with standing to challenge the procedures DOH has implemented … . Plaintiff does not articulate any harm or injury that he will suffer that is in some way an identifiable interest of his own, different from that of the public at large… .

Plaintiff and the members of the proposed class of adult home residents are also outside the “zone of interests” sought to be protected by the applicable statutory and regulatory framework under which the agency has acted … . DOH is vested with the authority to establish the procedures by which complaints are investigated and violations corrected (see Social Services Law § 461-o, 18 NYCRR § 486.2[a]). Moreover, DOH's enforcement powers are exceedingly broad, ranging from the imposition of civil penalties to the revocation, suspension or limitation of an operating certificate, after a hearing. DOH can even request that the Attorney General seek injunctive relief or criminally prosecute an operator for any violation or threatened violations of law or regulation (see SSL § 460—d; 18 NYCRR § 486.4[b]; see also 18 NYCRR §§ 486.4[b]-[h]). The governing regulatory scheme–which plaintiff does not challenge–plainly contemplates dialogue between DOH and adult home operators during the inspection process. Rather than providing for universal participation by residents in that process, they are expressly excluded from disclosure of investigation outcomes that are being contested by the operator (see Social Services Law §§ 461-a[1], [2][b], [2][c]; 461-d[3][b], [c], [g]; 461-o; 18 NYCRR 486.2[o]). The IRP is, therefore, wholly consistent with the enabling statutes. Bloomfield v Cannavo, 2014 NY Slip OP 08902, 1st Dept 12-23-14


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Rule Allowing Testing of Horses for Speed-Enhancing Drugs at Times Other than Just Before a Race Is a Valid Exercise of Racing & Wagering Board’s Authority

The Court of Appeals, in a full-fledged opinion by Judge Lippman, determined that the NYS Racing & Wagering Board did not exceed its authority when it promulgated rules allowing testing horses for the presence of speed-enhancing drugs at times other than immediately preceding a race:

While it is true that an administrative agency within the executive branch may not under the guise of rule-making engage in basic policy determinations reserved to the Legislature …, it is also true that the Legislature “has considerable latitude in determining the reasonable and practicable point of generality in adopting a standard for administrative action and, thus, [that] a reasonable amount of discretion may be delegated to . . . administrative officials” … . Here, the Legislature, in drafting Racing Law § 301 (2), was at pains to be explicit that that subsection was not to be construed as a limitation upon respondent's powers “to supervise generally all harness race meetings in this state at which pari-mutuel betting is conducted” and in that connection to “adopt rules and regulations . . . to carry into effect its [respondent's] purposes and provisions and to prevent circumvention or evasion thereof” (Racing Law § 301 [1]). Thus, not only does section 301 when read in its entirety make plain that the Legislature had no purpose of restricting respondent's general supervisory power over pari-mutuel harness race meetings, but it specifically authorizes regulatory action to prevent the circumvention or evasion of existing rules, necessarily including those whose object, sensibly understood, is “effectually” to prevent horses from racing under the influence of speed-enhancing doping agents. Out-of-competition drug testing, which, as noted, has as its raison d'etre the plugging of a loophole created in the pre-existing regulatory regimen by the introduction of doping agents capable of affecting competitive performance while eluding race day detection, is precisely the sort of measure contemplated by section 301 (1). As for section 902 (1), it too has no apparent limiting purpose — its designation of a laboratory to perform equine drug testing at race meetings does not reasonably signify that such testing may be required by respondent only at race meetings. Matter of Ford v NYS Racing & Wagering Board, 2014 NY Slip Op 08870, CtApp 12-18-14

 

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