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Petitioner, Who Was Required to Work in the “Work Experience Program [WEP]” to Receive Public Assistance, Was an “Employee” Entitled to Minimum Wage Under the Fair Labor Standards Act (FLSA)

The Court of Appeals, in a full-fledged opinion by Judge Lippman, over an extensive dissenting opinion by Judge Abdus-Salaam (in which Judge Pigott concurred), determined petitioner, who received public assistance from New York City and was therefore required to work 35 hours per week in the Work Experience Program (WEP), was an “employee” entitled to the minimum wage under the Fair Labor Standards Act (FLSA). Petitioner, after completing the WEP, won $10,000 in the state lottery. Under the lottery rules, the state sought one-half of the lottery proceeds as reimbursement for the public assistance paid to petitioner. Petitioner argued that the reimbursement reduced the amount the state paid him for his WEP work below the minimum wage required by the FLSA. The Court of Appeals agreed with petitioner’s argument. The bulk of the opinion and the dissent dealt with the propriety of finding petitioner was an “employee” entitled to the minimum wage protections of the FLSA:

… [W]e must apply the economic reality test and, under that test, the City should be considered Carver’s employer. The City had the power to hire and fire WEP workers, in that it was the City’s responsibility to assign public assistance recipients to a WEP agency and the City could dismiss workers from WEP based upon their performance. Additionally, the City and its WEP agencies supervise and control the work schedule of the workers. Furthermore, the City and its agencies, such as HRA, maintain the employment records of the WEP workers. While the Social Services Law, not the WEP agencies or the City, determines the rate and method of payment of WEP workers, that is simply one factor. The economic reality test “encompasses the totality of the circumstances” … . Matter of Carver v State of New York, 2015 NY Slip Op 08451, CtApp 11-19-15

 

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Substantial Evidence Did Not Support Department of Health’s Finding that Property Transfers Rendered Petitioner Ineligible for Medicaid Benefits

The Second Department annulled the Department of Health’s (DOH’s) finding that petitioner was ineligible for Medicaid benefits based on transfers of property made well before she exhibited signs of dementia. The court explained the analytical criteria:

In reviewing a Medicaid eligibility determination made after a fair hearing, the court must review the record as a whole to determine if the agency’s decisions are supported by substantial evidence and are not affected by an error of law … . Substantial evidence has been defined as “such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact” … . While the level of proof is less than a preponderance of the evidence, substantial evidence does not arise from bare surmise, conjecture, speculation, or rumor (see id. at 180), or from the absence of evidence supporting a contrary conclusion … . When determining Medicaid eligibility, an agency is required to “look back” for a period of 60 months immediately preceding the first date the applicant was both “institutionalized” and had applied for Medicaid benefits to determine if any asset transfers were uncompensated or made for less than fair market value (42 USC § 1396p[c][1][A], [B]; Social Services Law § 366[5][e][1][vi]). If such a transfer was made during that period, the applicant may become ineligible for Medicaid benefits for a specified period of time (see 42 USC § 1396p[c][1][A], [E]; Social Services Law § 366[5][e][3]), unless there is a “satisfactory showing” that, inter alia, the assets were transferred exclusively for a purpose other than to qualify for medical assistance (42 USC § 1396p[c][2][C][i], [iii]; Social Services Law § 366[5][e][4][iii]). It is the petitioner’s burden to rebut the presumption that the transfer of funds was motivated, in part if not in whole, by anticipation of a future need to qualify for medical assistance … .

Here, the evidence at the fair hearing showed that the latest of the subject transfers was made approximately two years before the petitioner started to exhibit signs of dementia. At the time of the transfers and in the years preceding her need for nursing home care, the petitioner was in good health and living independently. She was driving, cooking, exercising, and paying her own bills. The transfers themselves constituted gifts to her relatives, and the petitioner still had more than $250,000, not including Social Security benefits, following the transfers. Under these circumstances, the petitioner met her burden of rebutting the presumption that the subject transfers were motivated by the anticipation of a future need to qualify for medical assistance … . Matter of Sandoval v Shah, 2015 NY Slip Op 07034, 2nd Dept 9-30-15

 

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Family Assessment Response (FAR) Reports Are Not Subject to Expunction (Expungement) Prior to the Expiration of the 10-Year Statutory Period

The Second Department determined the Office of Children and Family Services (OCFS) did not have the authority to expunge a Family Assessment Response (FAR) report prior to the end of the 10-year statutory period.  The decision includes an in-depth analysis of the early expunction (expungement) of reports pursuant to Social Services Law 422(5)(c) and why such early expunction (expungement) is not authorized for Family Assessment Response (FAR) reports pursuant to Social Services Law 427-a:

… Social Services Law § 427-a is not “silent” on the matter of expunction of FAR reports and records. Rather, it expressly requires that FAR reports and records be maintained for 10 years after the initial report is made (see Social Services Law § 427-a[4][c][i]; [5][c]). Thus, as OCFS correctly determined, pursuant to Social Services Law § 427-a, FAR reports and records are only subject to expunction 10 years after the initial report is made to the SCR, and not before.

…[T]he existence of an early expunction provision in Social Services Law § 422 supports … this interpretation. In this respect, the failure of the Legislature to include an early expunction provision in Social Services Law § 427-a, when it had, prior to the enactment of Social Services Law § 427-a, included such a provision in a statute within the same statutory scheme, “should be construed as indicating that the exclusion was intentional” … .

…[T]he interpretation of Social Services Law § 427-a as not incorporating the early expunction process set forth in Social Services Law § 422(5)(c) does not conflict with the legislative intent of section 427-a. As explained in the relevant legislative history, “[t]raditionally, CPS is required to respond to reports of child abuse and maltreatment with a standard investigation that is narrowly focused on determining whether a specific incident of abuse actually occurred and if the child is at risk” … . “The focus of the CPS system on investigation of abuse and maltreatment has created an environment that, for many families, casts suspicion over any offer of services or service referrals” (id.). Implementation of a differential response, in the form of a FAR track, “permits a social service district to conduct an assessment of the family’s needs and strengths rather than investigate the validity of the allegations in a child abuse and maltreatment report” … . “The expectation of FAR is that families will be more likely to seek necessary help when a less adversarial, less threatening, approach is taken” … . Matter of Corrigan v New York State Off. of Children & Family Servs., 2015 NY Slip Op 05473, 2nd Dept 6-24-15

 

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Prior Owner of a Nursing Home Did Not Have Standing to Seek Payments from Medicaid for the Period During His Ownership—Only the Current Owner/Operator of the Nursing Home Had Standing

The Third Department determined petitioner, the former owner of a nursing home, did not have standing to seek payments from Medicaid for the period before petitioner sold the nursing home.  Only the current operator of the nursing home has standing to seek Medicaid payments. The court noted that petitioner had protected his interest in the payments by contract with the new owner of the nursing home:

Standing requires a party to demonstrate both an injury-in-fact and an injury falling “within the zone of interests or concerns sought to be promoted or protected by the statutory provision under which the agency has acted” … . Petitioner has clearly demonstrated an injury-in-fact particularly since it initiated the rate appeal while it was still the owner/operator … . The more difficult question is whether petitioner meets the zone of interests component as a former owner/operator. Our review shows that the governing statute and regulations contemplate the payment of Medicaid reimbursement to the current provider of medical services or the current operator of a nursing home facility. Specifically, Social Services Law § 367-a (1) (a) mandates that all payments “shall be made to the person, institution, state department or agency or municipality supplying such medical assistance” and expressly prohibits the assignment of a reimbursement claim to a third party. This legislation was designed to “relieve DOH from the potential liability and increased administrative burdens involved in such assignments” (Legislative Mem, 1971 McKinney’s Session Laws of NY at 2419-2420…). Correspondingly, nursing home facilities qualify for Medicaid payments provided that they possess a valid operating certificate issued by the Commissioner (see Public Health Law § 2801 [2], [3], [4] [b]; 10 NYCRR 86-2.1 [a]). An operating certificate “shall only be used by the established operator for the designated site or operation” (10 NYCRR 401.2 [b]). When, as here, the owner/operator sells a facility to a party who intends to continue operating the facility, it may transfer the operating certificate to the new operator only upon approval of the Public Health Council (see 10 NYCRR 401.3 [c]). Read together, these provisions establish that it is the current operator of a nursing home facility — i.e., the holder of a valid operating certificate — that is entitled to receive Medicaid payments and, thus, is the protected party within the statutory zone of interest. Matter of Park Manor Rehabilitation & Health Care Ctr., LLC v Shah, 2015 NY Slip Op 04909, 3rd Dept 6-11-15

 

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District Attorney’s Former Status as a Judge Hearing Cases Involving the Department of Social Services Did Not Preclude the District Attorney from Issuing Subpoenas for Department Records

The Third Department determined the district attorney’s former status as a judge in matters involving the county social services department did not require the quashing of subpoenas issued by the district attorney seeking records kept by the social services department, either under the Judiciary Law or on appearance-of-impropriety grounds:

The subpoena seeks records pertaining to business relationships between the Columbia County Department of Social Services (hereinafter DSS) and two contractors. The Commissioner first contends that, as the subpoena identifies the documents sought in part by reference to services provided to certain named children, Judiciary Law § 17 precludes the DA — who was formerly a Columbia County Judge — from issuing it. This statute prohibits a former judge from “act[ing]; as attorney or counsellor in any action, claim, matter, motion or proceeding, which has been before him [or her]; in his [or her]; official character” (Judiciary Law § 17). The Commissioner asserts that, because the named children were allegedly the subjects of Family Court proceedings pending before the DA in his former role as a judge, the subpoena violates this provision. In this context, however, there is a relevant distinction between the object of the underlying court proceedings and the individuals involved in such proceedings. Notably, although the subpoena does reference named children, it does not appear to directly relate to any court proceedings involving those children; it appears instead, although little detail is provided, to relate to social services provided to the named children by the contractors. Similarly, although DSS was a party to many court proceedings over which the DA presided during his judicial tenure, disqualification is not mandated in the absence of an evidentiary showing that the subpoena addresses any action or court proceeding that was previously before him in his judicial capacity… . Matter of Columbia County Subpoena Duces Tecum…, 2014 NY Slip Op 04104, 3rd Dept 6-5-14

 

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Loan to Grandson Was Not Made In Anticipation of the Need to Qualify for Medical Assistance

The Second Department determined the Department of Health’s (DOH’s) finding that the petitioner’s husband did not intend to transfer assets for valuable consideration was not supported by substantial evidence. Petitioner’s husband had loaned $200,000 to his grandson, and the grandson was making regular payments on the loan. The court explained the relevant law:

“In reviewing a Medicaid eligibility determination made after a fair hearing, the court must review the record, as a whole, to determine if the agency’s decisions are supported by substantial evidence and are not affected by an error of law” … . Substantial evidence has been defined as “such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact” … . While the level of proof is less than a preponderance of the evidence, substantial evidence does not arise from bare surmise, conjecture, speculation, or rumor …, or from the absence of evidence supporting a contrary conclusion … .

When determining Medicaid eligibility, an agency is required to “look back” for a period of 60 months immediately preceding the first date the applicant was both “institutionalized” and had applied for Medicaid benefits, to determine if any asset transfers were uncompensated or made for less than fair market value (42 USC § 1396p[c][1][A], [B]; Social Services Law § 366[5][e][1][vi]). If such a transfer was made during that period, the applicant may become ineligible for Medicaid benefits for a specified period of time (see 42 USC § 1396p[c][1][A], [E]; Social Services Law § 366[5][e][3]), unless there is a “satisfactory showing” that the applicant or the applicant’s spouse intended to dispose of the assets at fair market value or for valuable consideration, the assets were transferred exclusively for a purpose other than to qualify for medical assistance, or all assets transferred for less than fair market value have been returned to the applicant (42 USC § 1396p[c][2][C][i], [iii]; Social Services Law § 366[5][e][4][iii]). It is the petitioner’s burden to rebut the presumption that the transfer of funds was motivated, in part if not in whole, by anticipation of a future need to qualify for medical assistance … .

Applying these rules here, the DOH’s determination that the petitioner failed to make a satisfactory showing that her husband intended to transfer the assets for valuable consideration is not supported by substantial evidence. The petitioner correctly concedes that the loan was not made for fair market value since the payments due under the original note and the amended note are not actuarially sound in light of the note’s 15-year repayment term and the age of the petitioner and her husband (see 42 USC § 1396p[c][1][I]). However, the evidence adduced at the fair hearing rebutted the presumption that the transfer was motivated by anticipation of a future need to qualify for medical assistance … . In this regard, the petitioner’s husband stated that he entered into the loan agreement in order to create a source of income. The petitioner demonstrated that the loan was documented by the note and the amended note, that the petitioner’s husband received a stream of income from the loan by way of the monthly payments, and that the note provided a significantly greater rate of return than the one or two percent interest rate that the petitioner’s husband could have obtained from a bank at the time. In addition, there was evidence at the fair hearing that some of the petitioner’s assets had previously been loaned to her family members and that those loans were fully repaid. Morever, the letter from the petitioner’s physician supported her claim that she was in good health at the time of the loan, and that she only required Medicaid after she fell and broke her hip. Furthermore, the petitioner’s grandson and his wife averred that they were unable to immediately repay the entire loan because they used the loaned sum to renovate their home. Matter of Rivera v Blass, 2015 NY Slip Op 02768, 2nd Dept 4-1-15

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Municipalities (Counties) Are Not “Persons” and Therefore Cannot Challenge a Statute on Due Process Grounds

The Fourth Department determined municipalities are not “persons” and cannot sue under the due process clause of the US or New York Constitutions to declare a statute unconstitutional.  Here the counties sought to have a law prohibiting reimbursement for certain Medicaid expenses (section 61) overturned:

Here, petitioners contend that respondents’ enactment of section 61 impermissibly deprived them of vested rights to repayment under Social Services Law § 368-a, in violation of their rights under the due process clauses of the federal and state constitutions. The Fourteenth Amendment of the United States Constitution provides in relevant part that “[n]o State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law.” Similarly, article I, § 6 of the New York State Constitution provides in relevant part that “[n]o person shall be deprived of life, liberty or property without due process of law.” Thus, the constitutional provisions share a common link, i.e., they protect a “person” (id.; see US Const, 14th Amend, § 1).

Contrary to petitioners’ contentions, we conclude that they are not persons within the meaning of the constitutional due process provisions. This principle was stated clearly by the United States Court of Appeals for the Seventh Circuit, which concluded that “[m]unicipalities cannot challenge state action on federal constitutional grounds because they are not persons’ within the meaning of the Due Process Clause” (City of East St. Louis v Circuit Court for Twentieth Judicial Circuit, St. Clair County, Ill., 986 F2d 1142, 1144). Other decisions, without using the term “person,” also support the conclusion that a municipal body may not use the due process clause to challenge legislation of the municipality’s creating state. Thus, “[i]t has long been the case that a municipality may not invoke the protections of the Fourteenth Amendment against its own state . . . A municipality is thus prevented from attacking state legislation on the grounds that the law violates the municipality’s own rights . . . Moreover, while municipalities or other state political subdivisions may challenge the constitutionality of state legislation on certain grounds and in certain circumstances, these do not include challenges brought under the Due Process . . . Clause[] of the Fourteenth Amendment . . . This is because a municipal corporation, in its own right, receives no protection from the . . . Due Process Clause[] vis-a-vis its creating state’ ” … . Matter of County of Chautauqua v Shah, 2015 NY Slip Op 02245, 4th Dept 3-20-15

 

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Department of Social Services (DSS) Is Not a “Victim” under the Penal Law—Defendant Can Not Be Ordered to Pay Restitution to DSS for Care of Child-Victim of Defendant’s Offense

The Fourth Department determined the Department of Social Services (DSS) was not a “victim” within the meaning of Penal Law 60.27 and therefore the defendant could not be ordered to pay restitution to the DSS for expenses incurred caring for the child-victim of defendant's crime:

It is well established that restitution may be required for expenses that “were not voluntarily incurred, but stem from legal obligations that are directly and causally related to the crime” … . Here, however, the foster care expenses are the result of the placement of the victim in the care and custody of DSS pursuant to a proceeding in Family Court (see Family Ct Act § 1055 [1]), and thus DSS is performing its statutory duty pursuant to Social Services Law § 398 (2) (b). We note that the Legislature has specifically provided that certain governmental agencies and entities are entitled to restitution when performing their statutory duties (see Penal Law § 60.27 [9], [10], [13]). Section 60.27 (9), for example, was enacted to permit restitution to police agencies for unrecovered funds used in undercover drug purchases following the decision in People v Rowe (152 AD2d 907, 909, affd 75 NY2d 948, 949). In Rowe, we determined that, absent legislative intent to include a city police department as a “victim,” such funds could not be recovered by means of a court order of restitution. Similarly, here, in the absence of legislative intent that DSS is a “victim” pursuant to Penal Law § 60.27, we decline to impose an obligation on defendant to pay restitution for the expenditure of public funds for providing foster care for the victim. People v Johnson, 2015 NY Slip Op 01107, 4th Dept 2-6-15


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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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Court Should Not Have Denied Biological Mother’s Petition to Enforce the Visitation Provision in a Surrender Agreement Without Making a Finding Based Upon the Best Interests of the Child—Failure to Make Such a Finding Rendered the Record Insufficient for Review—Matter Sent Back for a Hearing

The Second Department, over a dissent, determined that Family Court should not have denied the biological mother's petition to enforce the provision of a surrender agreement which allowed her to visit the child without a finding that the requested visitation is not in the best interests of the child.  Finding the record inadequate for review, the Second Department sent the matter back for a hearing:

Social Services Law § 383-c(2)(b) permits the parties to a judicial surrender agreement to provide for a biological parent's continued communication or contact with the child. In determining whether to approve the agreement, the court must determine whether continued contact with the biological parent would be in the child's best interests (see Social Services Law § 383-c[2][b]). A provision providing for visitation with the biological parent is not legally enforceable unless the court that approved the surrender agreement states, in a written order, that the provision would be in the child's best interests (see Domestic Relations Law § 112-b[2]; cf. Social Services Law § 383-c[2][b]). Even then, in an enforcement proceeding pursuant to Domestic Relations Law § 112-b, a court “shall not enforce an order under this section unless it finds that the enforcement is in the child's best interests” (Domestic Relations Law § 112-b[4]). In other words, there must be a best interests judicial determination both at the time the surrender agreement is accepted and at the time that enforcement of a visitation provision is sought … . * * *

Here, the Family Court dismissed the petition without affording the biological mother an opportunity to establish that enforcement of the visitation provision of the surrender agreement would be in the child's best interests. Thus, there is no hearing record for us to review. Further, while it may be true that the Family Court was aware of facts and circumstances that may have supported a determination that enforcement of the visitation provision would not have been in the child's best interests, the record before us does not contain those facts. Accordingly, we are unable to conduct effective appellate review of the court's determination or to make required findings on our own  … . Matter of Jayden A, 2014 NY Slip Op 08637, 2nd Dept 12-10-14

 

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