New York State Court of Claims

New York State Court of Claims

CITY OF NEW YORK v. THE STATE OF NEW YORK, #2007-015-151, Claim No. 111772, Motion Nos. M-72318, M-72325


Synopsis


Motion for leave to reargue was granted and, upon reconsideration, Court adhered to its prior decision dismissing the claim, albeit on different grounds. Court held that primary jurisdiction of Commissioner of Education to hear and determine school district reimbursement issues was clear from the statutory scheme. Claimants did not exhaust their administrative remedies and, had they done so, Article 78 review in the Supreme Court would have been the appropriate procedure for review, not a plenary action in the Court of Claims.

Case Information

UID:
2007-015-151
Claimant(s):
THE CITY OF NEW YORK and THE CITY SCHOOL DISTRICT OF THE CITY OF NEW YORK
Claimant short name:
CITY OF NEW YORK
Footnote (claimant name) :

Defendant(s):
THE STATE OF NEW YORK
Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
111772
Motion number(s):
M-72318, M-72325
Cross-motion number(s):

Judge:
FRANCIS T. COLLINS
Claimant’s attorney:
Michael A. Cardozo, Esquire
Corporation Counsel of the City of New York
By: Alan H. Kleinman, EsquireAssistant Corporation Counsel
Defendant’s attorney:
Honorable Andrew M. Cuomo, Attorney General
By: Glenn C. King, EsquireAssistant Attorney General
Third-party defendant’s attorney:

Signature date:
January 30, 2007
City:
Saratoga Springs
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)



Decision

Claimants move to reargue and renew the defendant's prior motion to dismiss (M-72318) and for leave to file a late claim (M-72325). That branch of the claimants' motion (M-72318) which seeks reargument is granted and, upon reargument, the Court adheres to its prior decision dismissing the claim. That branch of the motion which seeks renewal is denied. In light of this decision, claimant's motion (M-72325) for leave to file a late claim is denied. Claimants seek reimbursement from the defendant pursuant to Education Law § 3202(5)(b) and § 3202(5)(d) for costs incurred for education-related services provided to 156 children placed in its school district for the school years 2000-01, 2001-02 and 2002-03. Defendant's motion to dismiss this claim was based on the contention that the Court lacks subject matter jurisdiction to determine this claim and that the dispute must be resolved, and any incidental damages awarded, in an Article 78 proceeding. Claimants, on the other hand, argue that the essential nature of its claim is to recover a monetary sum since the reimbursement provisions of § 3202(5)(b) and § 3202(5)(d) are mandatory. Thus, according to the claimants, there is no discretionary determination to review and resort to an Article 78 proceeding is not required.

The statutory scheme established by Education Law § 3202 and its implementing regulations reflects the Legislature's intent to vest in the Commissioner of Education exclusive original jurisdiction over the payment of tuition reimbursement for non-resident students. In these circumstances, "one who objects to the act of an administrative agency must exhaust available administrative remedies before being permitted to litigate in a court of law" (Watergate II Apts. v Buffalo Sewer Auth., 46 NY2d 52, 57 [1978]; see also Pocantico Home & Land Co., LLC v Union Free School Dist. of the Tarrytowns, 20 AD3d 458 [2005], lv denied 6 NY3d 709 [2006]; Matter of Board. of Educ. of Wappingers Cent. School Dist. v Watkins, 189 AD2d 1069 [1993] lv denied 82 NY2d 655 [1993]). This doctrine furthers the goal of relieving the courts of the burden of deciding issues entrusted to a state agency, and prevents judicial interference "with the administrators' efforts to develop . . . a co-ordinated, consistent and legally enforceable scheme of regulation and affording the agency the opportunity, in advance of possible judicial review, to prepare a record reflective of its 'expertise and judgment'" (Watergate II Apts. v Buffalo Sewer Auth., supra, 46 NY2d 52, 57). Where a statute provides for administrative appeal and review by way of an Article 78 proceeding, as it does here, the Court of Claims is precluded from considering the claim (Heslop v New York State Teachers' Retirement Sys., 195 AD2d 851 [1993]).

Section 3202(5)(b) of the Education Law requires children placed in a family home at board, orphan asylum, or other institution for the care, custody and treatment of children to be admitted to the schools of the school district in which the family home or institution is located (the receiving district) and authorizes, but does not mandate, the education department (SED) to reimburse the receiving district for "direct costs of such services in accordance with regulations promulgated by the commissioner and approved by the director of the budget... ." Section 3202(5)(b) imposes upon the school district in which the child resided at the time the department of mental hygiene assumed responsibility for the child (the sending district) the concomitant obligation to reimburse SED in an amount equal to the school district's "basic contribution", as defined in Education Law § 4401(8). Section 3202(5)(b) authorizes the comptroller to deduct from any state funds due to a school district an amount equal to the reimbursement required to be made.

Likewise, § 3202(5)(d)(1) of the Education Law requires children placed in an intermediate care facility for the mentally retarded to be admitted to the public schools of the district within which the facility is located, with certain exceptions. Pursuant to § 3202(5)(d)(4), SED is required to reimburse the school district in which the intermediate care facility is located for the full cost of all nonfederally reimbursable services. Section 3202(5)(d)(5) requires the sending district to reimburse SED in an amount equal to the school district's "basic contribution" as defined in Education Law § 4401(8). Upon the certification of the Commissioner of Education, section 3202(5)(d)(6) authorizes the comptroller to deduct from any state funds due to a school district an amount equal to the reimbursement required to be made. Section 3202(5)(d)(7) requires the intermediate care facility to notify both the sending and the receiving school district that a child has been placed in an intermediate care facility; section 3202(5)(d)(8) permits the receiving district to deny financial responsibility by written notice within twenty days of such notification and section 3202(5)(d)(9) provides that the school district furnishing the services, among others, may appeal a denial of responsibility to the Commissioner of Education who "shall review and determine responsibility for the child in question". Following an appeal to the Commissioner, section 3202(5)(d)(12) provides specifically for Article 78 review of any determination of the commissioner, stating:
Any final determination or order of the commissioner concerning residence or placement of any child under this paragraph may only be reviewed in a proceeding brought in the supreme court pursuant to article seventy-eight of the civil practice law and rules. In any such proceeding, the court may grant any relief authorized by the provisions of section seventy-eight hundred six of such law and rules or may, in its discretion, remand the proceedings to the commissioner. . . .
The Legislature's intent to vest in the Commissioner primary jurisdiction to determine issues relating to the apportionment of tuition is clearly reflected in Education Law § 3604(5)(a), which states:
Apportionment of state funds shall be made subject to the following conditions:
* * *
5. a. State aid adjustments. All errors or omissions in the apportionment shall be corrected by the commissioner. Whenever a school district has been apportioned less money than that to which it is entitled, the commissioner may allot to such district the balance to which it is entitled... .
That Education Law § 3604 applies to issues of tuition reimbursement is made clear by the provisions of section 3202 (5) (e) which permits the commissioner to grant waivers excusing the late filing of claims for costs incurred pursuant to subdivision (5) of 3202 "notwithstanding the provisions of paragraph a of subdivision five of section thirty-six hundred four of this chapter."

Consistent with the statutory mandate of section 3604 requiring the commissioner to correct errors in apportionment, the implementing regulation for tuition reimbursement under § 3202 (8 NYCRR § 175.8)[1], requires that reimbursement for such costs "shall" be subject to the approval of the Commissioner (8 NYCRR § 175.8[a][c]; see also Education Law § 310[2][7] and § 305).

The primary jurisdiction of the Commissioner of Education to hear and determine issues involving the allocation of tuition reimbursement under § 3202 is clear from the statutory scheme. The Legislature has expressly delegated to the Commissioner responsibility for the determination of which school district bears responsibility for education-related costs for non-resident children placed in an intermediate care facility (Education Law § 3202[5][d][9]). In addition, the implementing regulation for children placed in a family home at board or other facility pursuant to Education Law § 3202(5)(b) sets forth the method by which the amount of reimbursement is to be calculated, and states: "State reimbursement for such costs shall be subject to the approval of the commissioner and shall be payable on a per- pupil basis" (8 NYCRR § 175.8[a]; see also, 8 NYCRR § 118.8). The statutory scheme thus evinces a clear Legislative intent to vest in the Commissioner of Education the primary responsibility to determine the amount of State reimbursement to be paid upon the placement of children in both a family home at board or other facility pursuant to § 3202(5)(b) and an intermediate care facility pursuant to § 3202(5)(d)(1).

The Commissioner's authority to determine issues involving the allocation of State funds is further supported by the recent decision of the Appellate Division, Third Department in Matter of Rochester City School Dist. v New York State Educ. Dept. (31 AD3d 993 [2006]). In that case, Article 78 review of the determination of the Commissioner disallowing state aid for an employment education program was sought and the decision affirmed on appeal. With respect to the lack of a specific statutory provision authorizing an audit, which formed the basis for the Commissioner's determination, the Court stated:
In accordance with Education Law § 305, the Legislature has extended to the Commissioner 'general supervision over all schools and institutions which are subject to the provisions of this chapter, or of any statute relating to education, and shall cause the same to be examined and inspected' (id. at 994-995, quoting Education Law § 305[2]).
Article 78 review following an appeal to the Commissioner pursuant to Education Law § 310 has also been sought to review the determination of the Commissioner regarding the residency of a child and the obligation for tuition reimbursement under § 3202 (see Matter of Gaffney v New York State Dept. of Educ. 210 AD2d 810). In this case, too, issues of residency are necessarily subsumed in the determination of which district should reimburse SED under either § 3202(5)(b) or § 3202(5)(d)(5) (see also Jeter v Ellenville Central School District, 41 NY2d 283 [1977] [Section 3202 of the Education Law imposes the cost of instruction on the district in which the child resided at the time the social services district assumed responsibility for the child and no presumption of residency is warranted]).

Under the related doctrine of primary jurisdiction, the courts have generally refrained from deciding matters involving the specialized knowledge and expertise of the Commissioner. Such matters include educational policy decisions such as the validity of testing procedures (James v Bd. of Educ. of City of New York, 42 NY2d 357 [1977]; whether a student is in good standing (Matter of Connolly v Rye School Dist., 31 AD3d 444 [2006]); a factual dispute regarding an employment related matter (Matter of DiTanna v Board of Educ. of Ellicottville Cent. School Dist., 292 AD2d 772 [2002] lv denied 98 NY2d 605 [2002]); disciplinary matters (Matter of Langston v Iroquois Cent. School Dist., 291 AD2d 845 [2002]; a factual dispute involving whether certain lands lie in one school district or another (Matter of Bd. of Educ. of the Lisbon Central School Dist. v Sobol, 226 AD2d 945) [1996], and the decision to close a school (Matter of Ferrer v Quinones, 132 AD2d 277 [1987]). The rationale for the rule was stated by the Court of Appeals in James v Bd. of Educ. of City of New York , supra, 42 NY2d 357:
The general legislative and constitutional system for the maintenance of public schools secures review by the board of education and, on the State level, by the Commissioner of Education. The purpose of these provisions 'is to make all matters pertaining to the general school system of the state within the authority and control of the department of education and to remove the same so far as practicable and possible from controversies in the courts' (id. at 366, quoting Bullock v Cooley, 225 NY566, 576-577).
The foregoing demonstrates that the determination of the claimants’ eligibility for reimbursement and the amount of reimbursement to be paid are matters the Legislature has chosen to place within the authority and control of the Department of Education for hearing or determination by the Commissioner. Claimants’ failure to exhaust their administrative remedies before resort to the courts is therefore fatal to this claim. Had such administrative remedies been pursued Article 78 review in the Supreme Court would have been the appropriate procedure for review, not a plenary action in the Court of Claims (Matter of Gross v Perales, 72 NY2d 231, 236 [1988]; Bd. of Education of the City of New York v State of New York, 88 AD2d 1057 [1982], affirmed 60 NY2d 716 [1983]; Guy v State of New York, 18 AD3d 936 [2005]; Safety Group No. 194 - - New York State Sheet Metal Roofing & A.C. Contrs. Assn.v State of New York, 298 AD2d 785 [2002]; Harvard Fin. Servs. v State of New York, 266 AD2d 685 [1999]; Heslop v New York State Teachers' Retirement Sys., 195 AD2d 851 [1993]).

In support of their cause of action for ministerial negligence (the second cause of action in the proposed claim), the claimants allege that the defendant failed to timely notify them of the identity of children placed in intermediate care facilities or other facilities as statutorily mandated by Education Law § 3202(5)(b) and § 3202(5)(d)(7). The result, according to claimants, was SED's denial of reimbursement for 156 children on the ground that the request for reimbursement was untimely. This Court acknowledged in its prior decision the potential for a cause of action for ministerial negligence as the result of the defendant's alleged failure to timely notify the claimants of the identity of the children placed in intermediate care facilities within its district as specifically required by Education Law § 3202(5)(d)(7). No such similar notification requirement is mandated for those children placed in a family home at board or other facility pursuant to § 3202(5)(a).

Although claimants allege that they were foreclosed from submitting a timely claim for tuition reimbursement under § 3202(5)(d)(4) due to the defendant’s failure to timely identify those children in the receiving district for whom reimbursement was due, claimants could have timely requested a waiver of the time limitation. Education Law § 3604(5)(a) states, as pertinent here: "For claims for which payment is first to be made in the nineteen hundred ninety-seven–ninety-eight school year and thereafter, the commissioner shall certify no payment to a school district based on a claim submitted later than one year after the close of such school year." With respect to the placement of children in intermediate care facilities, § 3202(5)(e) provides that notwithstanding the time limitations set forth in § 3604:
the commissioner shall be authorized to grant a waiver excusing the late filing of claims submitted for costs incurred pursuant to this subdivision, upon findings that the school district has submitted a timely request for a waiver and has submitted proof satisfactory to the commissioner that the delay in filing was caused by a party other than the school district. A request for such a waiver, together with all supporting documentation, shall be submitted to the commissioner ...within fourteen months after the end of the school year in which services were provided pursuant to this subdivision....
Claimants' request for a waiver excusing late filing was not made until September 2005, more than fourteen months after the end of the last school year for which reimbursement was sought. Had the waiver request been timely, a denial by the commissioner would have been subject to review by a proceeding in the Supreme Court pursuant to CPLR Article 78 (cf., Matter of Davis v Commissioner of Education of the State of N.Y., 189 AD2d 1046 [1993] [Article 78 proceeding to annul the discretionary determination of the Commissioner in denying a request to file an appeal late was denied as not arbitrary or capricious]). Claimants state in paragraph 19 of the claim that the City Department of Education "has for years notified SED of OMRDD's failure to provide STAC 200s to DOE" and acknowledges in paragraph 21 that in December, 2003 the City of New York commenced a combined article 78/declaratory judgment action "against the respondents challenging SED's failure to reimburse the City for Chapter students it was instructing and for whom it was eligible for 100% reimbursement." The claimants' failure to utilize the available statutory mechanisms of administrative action followed by judicial review via an article 78 proceeding does not create a right of action for direct money damages in the Court of Claims.

Based on the foregoing, that branch of the claimants' motion (M-72318) which seeks leave to reargue is granted and, upon reargument, the Court adheres to its prior decision dismissing the claim, albeit on grounds other than those stated in the Court's original decision. The motion to renew is denied as is the claimants' motion (M-72325) to file a late claim.


January 30, 2007
Saratoga Springs, New York

HON. FRANCIS T. COLLINS
Judge of the Court of Claims


The Court considered the following papers:
Motion No. M-72318
  1. Notice of motion to reargue and renew dated September 22, 2006;
  2. Affirmation of Alan H. Kleinman dated September 22, 2006 with exhibits;
  3. Affirmation of Glenn C. King dated October 25, 2006;
  4. Reply affirmation of Alan H. Kleinman dated November 14, 2006 with exhibit.

Motion No. M-72325

  1. Notice of motion to file a late claim dated September 22, 2006;
  2. Affirmation of Alan H. Kleinman dated September 22, 2006 with exhibits;
  3. Affirmation of Glenn C. King dated October 25, 2006;
  4. Reply affirmation of Alan H. Kleinman dated November 14, 2006 with exhibit.

  1. [1]Although the subparagraphs of section 3202 of the Education Law were renumbered by chapter 57 of the laws of 1993, it is apparent that 8 NYCRR § 175.8 was not amended to reflect the change.