Matter of New York Coalition for Quality Assisted Living Inc. v Daines

[*1] Matter of New York Coalition for Quality Assisted Living Inc. v Daines 2009 NY Slip Op 51942(U) [24 Misc 3d 1250(A)] Decided on September 11, 2009 Supreme Court, Albany County Lynch, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on September 11, 2009
Supreme Court, Albany County

In the Matter of the Application of New York Coalition for Quality Assisted Living, Inc.; GARDEN OF EDEN; HEDGEWOOD HOME; L'DOR; MARY AGNES MANOR; MERMAID MANOR HOME FOR ADULTS; NEW BROADVIEW MANOR; NEW BROOKHAVEN TOWN HOUSE FOR ADULTS; NEW GLORIA'S MANOR HOME FOR ADULTS; OCEANVIEW MANOR HOME FOR ADULTS; PARKVIEW HOME FOR ADULTS; QUEENS ADULT CARE CENTER; SEAVIEW MANOR, LLC; SURFSIDE MANOR HOME FOR ADULTS, LLC; WAVECREST HOME FOR ADULTS; LAKESIDE MANOR HOME FOR ADULTS, INC.; BAYVIEW MANOR HOME FOR ADULTS, LLC, Petitioners, For a Judgment Pursuant to Article 78 of the Civil Practice Laws and Rules

against

Richard F. Daines, M.D. Commissioner of the NEW YORK STATE DEPARTMENT OF HEALTH, Respondent.



6328-08



O'Connell and Aronowitz

Attorneys for Petitioners (Jeffrey J. Sherrin, Esq.; Jane Bellow Burke, Esq.; and

Kurt E. Bratten, of counsel)

54 State Street

Albany, New York 12207-2501

Andrew M. Cuomo

Attorney General of the State of New York

Attorney for Respondent

(Shoshana V. Asnis, Esq., of counsel)

The Capitol

Albany, New York 12224-0341

Schwartzapfel Truhowsky Marcus, P.C.

Attorneys for Amici

(Deborah Truhowsky, Esq., of counsel)

300 Jericho Quadrangle Suite 180

Jericho, New York 11753

Michael C. Lynch, J.

In this CPLR article 78 proceeding, petitioner New York Coalition for Quality Assisted Living, Inc., a not-for-profit a trade association established to advocate for and represent the interest of adult care facilities, and the other petitioners, licensed adult care facilities, effectively seek a judgment nullifying certain challenged regulations associated with Public Health Law, article 46-B; and precluding the Commissioner and his agents/employees from enforcing these regulations. Petitioners also seek legal fees, together with interest, costs and disbursements, pursuant to the Equal Access to Justice Act (CPLR, article 86). The Commissioner opposes the petition. Long Care Community Coalition; Alzheimer's Association of New York City; NCCNHR: the National Consumer Voice for Quality Long-Term Care; New York State Nurses Association; New York State Long Term Care Ombudsman Program; Assisted Living Consumer Alliance; Friends and Relatives of the Institutionalized Ages; Suffolk County Long Term Care Ombudsman Program; and Coalition of Institutionalized Ages and Disabled seek amicus status to submit a brief opposing the petition.

As to the application for amicus status, "[a]n amicus curiae — friend of the court — is a person appearing in a judicial proceeding to assist the court by giving information or otherwise. . . [and] is heard only by leave of the court" (1 NY Jur, Actions § 81). Where a case involves " questions of important public interest leave is generally granted to file a brief as amicus curiae'" (Kruger vBloomberg, 1 Misc 3d 192, 196 [Sup Ct, New York County, 2003], quoting Colmes v Fisher, 15 Misc 222, 223 [Sup Ct, Erie County, 1934]). Here, the case concerns questions of important public interest and the movants have shown that they represent a point of view which may not be fully represented by the parties (see id. at 198). Accordingly, the Court grants the application and accepts the submitted brief.

By way of background, adult care facilities (ACFs) function as a family type home or [*2]residence for adults which provide care either temporarily or on a long-term basis "to adults who, though not requiring continual medical or nursing care, . . . are by reason of physical or other limitations. . . unable or substantially unable to live independently" (Social Services Law § 2 [21]; see New York Coalition for Quality Assisted Living, Inc. v Novello, 53 AD3d 914, 915 n 1 [3d Dept 2008], lv denied 11 NY3d 715 [2009]). Prior to 2004, many of these ACFs referred to themselves as assisted living residences. In an attempt to "clarify, improve and standardize business practices with regard to entities providing assisted living services in New York State" (Budget Report on Bills, Bill Jacket, L 2004, ch 2) and to "fill[] an important statutory gap in the state's long term care system" (Hannon Letter, id.), in 2004, the Legislature enacted the Assisted Living Reform Act (L 2004, ch 2; hereinafter referred to as the Act).

The Act was codified as article 46-B of the Public Health Law. In passing the Act, the Legislature found that "the philosophy of assisted living emphasizes aging in place, personal dignity, autonomy, independence, privacy and freedom of choice" (Public Health Law § 4650). Further, the Legislature noted: The intent of this article is to create a clear and flexible statutory structure for assisted living that provides a definition of assisted living residence; that requires licensure of the residence; that requires a written residency agreement that contains consumer protections; that enunciates and protects resident rights; and that provides adequate and accurate information for consumers, which is essential to the continued development of a viable market for assisted living. Entities which hold themselves out as assisted living residences must apply for licensure and be approved by the state to operate as assisted living residences pursuant to this article, and must comply with the requirements of this article (id.).

Article 46-B defines an "assisted living residence" (ALR) as "an entity which provides or arranges for housing, on-site monitoring, and personal care serves and/or home care services (either directly or indirectly), in a home-like setting to five or more adult residents unrelated to the assisted living provider" (Public Health Law § 4651 [1]). "Aging in place" is defined as "care and services at a facility which possesses an enhanced assisted living certificate which . . . accommodates a resident's changing needs and preferences in order to allow such resident to remain in the residence as long as the residence is able and authorized to accommodate the resident's current and changing needs" (Public Health Law § 4651 [13]).

In the Act, the Legislature empowered the Commissioner to, among other things, promulgate "such rules and regulations as are necessary to implement the provisions" of article 46-B (Public Health Law § 4662 [1] [b]). In addition, the Act created a task force to provide recommendations and to update and revise requirements and regulations applicable to ACFs and ALRs "to better promote resident choice, autonomy and independence" (L 2004, ch 2, § 5). However, the Act prohibited the Commissioner from enacting emergency regulations (see L 2004, ch 2, § 7).

Beginning in 2005, the Department began posting guidelines regarding article 46-B on its website. In addition, the Task Force also met to discuss proposed regulations. On March 8, 2007, the Department published a Notice of Proposed Rule Making in the State Register, requesting comments on proposed regulations implementing the Act. After receiving comments [*3]on the posted documents and proposed regulations, on December 26, 2007, the Department published a Notice of Revised Rule Making in the State Register. On March 26, 2008, the Commissioner issued regulations in conjunctions with article 46-B and published the Notice of Adoption (see 10 NYCRR, part 1001).

It is those regulations which are the subject of this proceeding. Petitioners commenced this CPLR article 78 proceeding to challenge some of the regulations, contending that the Commissioner exceeded his authority in promulgating regulations that require enhanced assisted living residences (EALRs) and special needs assisted living residences (SNALRs) to hire staff nurses and in promulgating a regulation regarding the dispensing of medication that requires ALRs to adhere to Department guidance letters.[FN1] Effectively, petitioners seek a judgment nullifying those regulations and staying the enforcement of them.[FN2] In responding, the Commissioner notes that in "promulgating the regulations[,] the Department carefully considered the impact that its regulations would have on existing adult care facilities that wished to become ALRs, but with the understanding that every adult care facility might not be able to meet standards to be certified as ALRs, EALRs or SNALRs. Such facilities can continue to operate as adult care facilities" (Kissinger Affidavit at ¶ 25).

" 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'" (Matter of Medical Socy. v Serio, 100 NY2d 854, 865 [2003], quoting Matter of Nicholas v Kahn, 47 NY2d 24, 31 [1979]). Here, petitioners challenge whether regulations promulgated by the Commissioner under a grant of statutory authority in article 46-B of the Public Health Law are consistent with that enabling legislation. "It is well settled that a State regulation should be upheld if it has a rational basis and is not unreasonable, arbitrary, capricious or contrary to the statute under which it was promulgated. If a regulation is to be nullified, the challenger must establish that it is so lacking in reason for its promulgation that it is essentially arbitrary'" (Kuppersmith v Dowling, 93 NY2d 90, 96 [1999], quoting Matter of Marburg v Cole, 286 NY 202, 212 [1941]; see Matter of Consolidated Nursing Home, Inc. v Commissioner of New York State Dept. of Health, 85 NY2d 326, 331-332 [1995]; Matter of Adesso, 89 AD2d 662, 662 [3d Dept 1982]). Further, " [e]ven under the broadest and most open-ended of statutory mandates, an administrative agency may not use its authority as a license to correct whatever societal evils it perceives'" (Matter of Medical Socy., 100 NY2d at 865, quoting Boreali v Axelrod, 71 NY2d 1, 8-9 [1987]; see Matter of Beer Garden, Inc. v New York [*4]State Liquor Auth., 79 NY2d 266, 276 [1992]).

Petitioners first contend that the Act neither permits nor requires EALRs or SNALRs to directly employ nursing staff to provide nursing services and, by promulgating regulations to that effect, the Commissioner has unlawfully and arbitrarily exceeded his authority. Petitioners further explain: The Petitioner adult homes serve a predominantly indigent population, who rely on the SSI program to pay the cost of their room, board and services. The SSI rate is legislatively set, and the Petitioner adult homes cannot raise their rates to cover the . . . increased costs of hiring nurses. Respondent's interpretation effectively shifts the obligation to pay for additional nurses from the resident to the adult home. This puts the Petitioners at a competitive disadvantage with respect to other adult homes, which have a predominantly private-pay population, and that can raise their rates to cover the cost of hiring nurses (Petition at ¶ 11).

Petitioners further explain that nursing costs for the majority of their residents are paid through medicaid, noting that "a Medicaid recipient living in an adult home is considered to be residing in his or her own home and is entitled to Medicaid-funded nursing services in the adult home when such services are medically necessary" (id. at ¶ 64). Petitioners maintain that, for residents in EALRs that are "aging in place," article 46-B places the burden on that resident to pay for any additional nursing services needed and not on the ALR — which solely assumes the role of helping to coordinate such care. Thus, petitioners argue that, by promulgating regulations requiring EALRs and SNALRs to hire nurses directly to perform nursing tasks (see 10 NYCRR 1001.10 [m] [4]; 10 NYCRR 1001.11 [j], [m]), the Commissioner "has effectively shifted, from the resident to the ALR facility, the responsibility and burden of hiring and paying for additional nursing, medical or hospice staff that residents require to continue to reside in the assisted living residence" (Petition at ¶ 85).

Petitioners' argument was further highlighted in oral argument before the Court on April 30, 2009. The Commissioner responded by asserting the regulations are a reasonable application of the statute and that "there is no proscription against making this shift, if you want to call it a shift" (Oral Argument Transcript [dated 4/30/09], at 21-22). In any event, the Commissioner contended that the intent of the legislation was to create a "niche place to allow patients to age in place" and that cost was simply a "secondary" concern (id. at 22).

Certainly article 46-B has set up a statutory and regulatory framework for assisted living residences but it appears from the legislative history and the article itself it was doing so in order to, among other things, improve and standardize business practices for entities already engaged in such care — albeit unregulated (see Budget Report on Bills, Bill Jacket, L 2004, ch 2). Therefore, there was not a "blank slate" to create a new model that the Commissioner appears to be suggesting in his argument.

The regulations at issue require, among other things, EALRs and SNARLs to have a registered nurse on duty on site eight hours a day, five days a week and a licensed practical nurse on duty eight hours a day, two days a week (see 10 NYCRR 1001.10 [m] [4]; 10 NYCRR 1001.11 [j], [m]). These regulations do not comport with Public Health Law § 4659, which provides that an individualized service plan is to be developed for each resident in consultation [*5]with the resident's physician and, where necessary, a home care services agency. That plan shall "include the services to be provided and how and by whom services will be provided and accessed" (Public Health Law § 4659 [4] [emphasis supplied]). The underscored phrase anticipates that medical services will be provided through the resident's medical provider and not by facility staff. The Court recognizes that an EALR "may hire care staff directly...or contract with a home care services agency..." (Public Health Law § 4655 [1] [d] [emphasis supplied]; see also Public Health Law § 4651 [1]). The underscored "may" is not a statutory mandate to hire staff, but permits a facility to do so. Not to be overlooked here is that for a resident to be eligible to live in an EALR, a physician must report that "the resident is not in need of twenty-four hour skilled nursing care or medical care which would require placement in a hospital or residential health care facility" (Public Health Law § 4655 [2] [b]). Moreover, where a resident's condition changes to require such care, discharge is mandated unless the resident "hires appropriate nursing, medical or hospice staff to care for his or her increased needs" (Public Health Law § 4655 [4] [a]).

Contrary to respondents argument, the Court does not find authority for the challenged regulations within Public Health Law § 4655. To the contrary, while Public Health Law § 4655 permits a facility to provide nursing care, the decision to do so remains discretionary. Moreover, the statute expressly imposes the burden on the resident to hire appropriate nursing or medical care when round the clock services become necessary.

In effect, the challenged regulations impose a hiring and cost obligation upon EALR's that the statute does not embrace. Such a determination to shift the cost of a nursing service from the resident to the facility is an inherently legislative function beyond the scope of respondent's authority (see Boreali v. Axelrod, supra, 71 NY2d at 9, 11; see also McKinney's Cons. Laws of NY, Book 1, Statutes §§ 2,3). Nor is there any viability in respondent's thesis that the regulation is not prohibited by the Act. This reverse logic contradicts the fundamental premise that the agency may only implement a legislative directive within reason and in a manner "consistent with the enabling legislation" (Matter of Medical Socy., 100 NY2d at 865). The question is not whether the statute prohibits the challenged regulation, but whether the regulation reasonably implements the legislative directive. This Court finds that it does not.

As this Court held in a related case decided herewith, "the staffing regulation[s] appear[] to be inconsistent with the intent of the legislature in making the possibility of aging at home' available for low to middle income residents since these staffing requirements will inflate costs" (Matter of Empire State Assn. of Assisted Living, Inc. v Daines, Sup Ct, Albany County, Lynch, J., Index No. 6275-08). That point is further borne out in letters sent to the Commissioner by several State Assembly Members and Senators, including Sen. Maziarz the Act's sponsor, complaining that the personnel regulations requiring the hiring of nursing staff did not comply with the Legislature's intent (see id.).

Accordingly, this Court finds that, in promulgating the subject regulations, the Commissioner transgressed the "difficult-to-define line between administrative rule-making and legislative policy-making" (Boreali, 71 NY2d at 11). Therefore, nullification of regulations 10 NYCRR 1001.10 and 10 NYCRR 1001.11 is warranted (see id.).

Next, petitioners challenge the Commissioner's authority to promulgate a regulation treating "guidance documents" regarding medicine for residents with the same force and effect of [*6]a Department regulation or rule. In relevant part, the challenged regulation provides: Medication acquisition, storage and disposal, and assistance with self-administration of medication shall be performed in conformance with the standards for such practice dictated by the facility's certification as either an adult home or enriched housing program, pursuant to 18 NYCRR section 487.7 (f) or 488.7 (d) respectively, and consistent with any and all operative guidance documents relating to medication services provided to facility residents issued by the department (10 NYCRR 1001.10 [l] [1] [emphasis supplied]).

Petitioners contend that binding ALR's to "guidance documents" issued by the Department is contrary to the State Administrative Procedures Act (SAPA). Petitioners maintain that the Commissioner is attempting to circumvent the SAPA and, in so doing, has exceeded his authority.

The Commissioner contends that the guidance documents at issue here and referred to in the subject regulation were issued in 2004 and 2005 regarding 18 NYCRR 487.7 (b) and 488.7 (d). They further note these guidance documents were unsuccessfully challenged in a prior proceeding by some of the petitioners now appearing in this proceeding (see New York Coalition for Quality Assisted Living, Inc. v Novello, 53 AD3d 914 [3d Dept 2008], lv denied 11 NY3d 715 [2009], supra). Further, the Commissioner maintains that the Department's inclusion of the reference to the guidance documents was simply to make certain that ALRs were on notice of the existence of the guidance documents. To the extent the current regulatory language has caused confusion, the Department will be taking steps to amend the regulation to remove such confusion (Kissinger Affidavit at ¶ 52).

Since the Commissioner has effectively acknowledged that the complained of language in the above-recited regulation causes confusion and the Department notes that it has no intention of exposing any ALR operator to penalties because they have not complied with such documents, the Court grants that branch of the petition seeking to nullify the regulation to the extent it contains such language. While the Commissioner may have been referring to specific documentation already upheld by the Third Department (see id.), the disputed phrase is broad enough to apply to a future guidance document. Such a document is "an interpretive statement that is merely explanatory" (id.) and cannot serve as a regulation or rule. Otherwise, the Commissioner must follow the steps set forth in SAPA when promulgating regulations (see Matter of Elcor Health Servs., 100 NY2d at 279; SAPA § 202).

Finally, the petition seeks legal fees pursuant to the New York State Equal Access to Justice Act (EAJA). That act "permits reasonable attorney's fees to a prevailing party in a suit against the State, unless the position of the State was substantially justified or special circumstances make an award unjust'" (Matter of Walker v Novello, 36 AD3d 1100, 1101 [3d Dept 2007], quoting Matter of Wittlinger v Wing, 99 NY2d 425, 429 [2003]; see CPLR 8601 [a]). "The Legislature enacted the [EAJA] to help litigants secure legal assistance to contest wrongful actions of state agencies" (Matter of Wittlinger, 99 NY2d at 431). Further, merely because a party prevails in such litigation does not mean that the State's position was unjustified [*7](see Matter of New York State Clinical Laboratory Assn., Inc. v Kaladjan, 85 NY2d 346, 356-357 [1995]).

Here, while petitioners have requested such fees, they have not established that the Commissioner's position in this matter was unjustified nor, for that matter, have they demonstrated the amount of the fee request or the services counsel rendered. Moreover, the Court will not award such fees just because petitioners have prevailed (see id.). Thus, the Court declines to exercise its discretion to award fees pursuant to the EAJA.

Otherwise, this Court has reviewed the parties' remaining arguments and finds them to be either without merit or unnecessary to consider given this Court's determination. Accordingly, it is

ORDERED and ADJUDGED that the petition is granted to the extent discussed in the Court's decision; and it is further

ORDERED and ADJUDGED that regulations 10 NYCRR 1001.10 and 10 NYCRR 1001.11 are nullified to the extent discussed in the Court's decision.

This Memorandum constitutes the Decision and Order of the Court. This original Decision and Order is being returned to the attorney for petitioners. The below referenced original papers are being mailed to the Albany County Clerk. The signing of this Decision and Order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the provision of that rule regarding filing, entry, or notice of entry.

DATED:

Albany, New York

Michael C. Lynch

Justice of the Supreme Court Footnotes

Footnote 1: ALR refers to an assisted living residence; EALR refers to an enhanced assisted living residence; SNALR refers to a special needs assisted living residence (see Public Health Law §§ 4651 [1], [13-15]; 4654; 4655).

Footnote 2: Although in both the notice of petition and the wherefore clause of the petition petitioners seek declaratory relief, they have not commenced a declaratory judgment action. However, the Court notes that none is needed since the essence of what they seek is nullification of the challenged regulations, which can be resolved in a CPLR article 78 proceeding (see generally New York City Health & Hosps. Corp. v McBarnette, 84 NY2d 194, 203-204 [1994]).