New York State Court of Claims

New York State Court of Claims

MANHASSET v. NEW YORK STATE DEPARTMENT OF CIVIL SERVICES, in its capacity as administrator of the NEW YORK STATE HEALTH INSURANCE PROGRAM, # 2010-032-014, Claim No. 116703, Motion No. M-77074, Cross-Motion No. CM-77502

Synopsis

Case information

UID: 2010-032-014
Claimant(s): MANHASSET UNION FREE SCHOOL DISTRICT
Claimant short name: MANHASSET
Footnote (claimant name) :
Defendant(s): NEW YORK STATE DEPARTMENT OF CIVIL SERVICES, in its capacity as administrator of the NEW YORK STATE HEALTH INSURANCE PROGRAM
Footnote (defendant name) :
Third-party claimant(s):
Third-party defendant(s):
Claim number(s): 116703
Motion number(s): M-77074
Cross-motion number(s): CM-77502
Judge: JUDITH A. HARD
Claimant's attorney: Frazer & Feldman, LLP
By: Joseph Carbonaro, Esq.
Defendant's attorney: Hon. Andrew M. Cuomo, NYS Attorney General
By: Michele M. Walls, Assistant Attorney General, Of Counsel
Third-party defendant's attorney:
Signature date: April 2, 2010
City: Albany
Comments:
Official citation:
Appellate results:
See also (multicaptioned case)

Decision

Defendant moves this Court for an order dismissing Claim No. 116703 on the grounds that the Court lacks subject matter jurisdiction and personal jurisdiction, the claim fails to state a cause of action and the claim is untimely. Claimant opposes the motion and cross-moves for permission to file and serve a late claim. For the reasons set forth below, the Court grants defendant's motion to dismiss and denies claimant's cross motion for permission to file and serve a late claim.

The underlying claim, which was filed on April 13, 2009, alleges money damages resulting from the alleged negligent administration of the New York Benefits Eligibility and Accounting System (NYBEAS) by the New York State Department of Civil Service (DCS), which is charged with the responsibility for administering the New York State Health Insurance Plan (NYSHIP). The claim alleges that defendant failed to credit claimant, who is the employer of eligible active and retired employees, for excess health insurance premiums it paid for 29 of its non-active employees and their spouses who were Medicare-eligible retirees and subject to lower premiums. Defendant moved to dismiss the claim in lieu of serving an answer.

MOTION TO DISMISS (M-77074)

In support of its motion to dismiss, defendant annexes the affidavit of Robert W. DuBois, Director of the Employee Benefits Division of the DCS, who sets forth the facts concerning the administration of NYBEAS. He states that NYSHIP provides medical and other benefits through Health Maintenance Organizations and the Empire Plan (DuBois Affidavit, sworn to August 3, 2009, 5). He explains that the President of the Civil Service Commission is authorized, pursuant to CSL 162 [1], to purchase contracts of health insurance from carriers authorized to conduct insurance business in the State (DuBois Affidavit, sworn to August 3, 2009, 5), and discusses how an agency, such as claimant, that is electing to participate in NYSHIP is subject to the President's regulations (DuBois Affidavit, sworn to August 3, 2009, 6; see CSL 163.4). Among said regulations, which are codified in 4 NYCRR 73.1 et seq., is the requirement that a participating agency maintain enrollment and up-to-date eligibility records for covered employees, retired employees and dependents, promptly certify the eligibility or non-eligibility for benefits of their employees and retired employees, and their dependents, and report such information and data concerning the administration and operation of the plan as the President of the Civil Service Commission may request (DuBois Affidavit, sworn to August 3, 2009, 6).

Mr. DuBois further explains that NYBEAS is a web-based enrollment and accounting system used to maintain enrollment data for benefit programs administered by DCS including NYSHIP (DuBois Affidavit, sworn to August 3, 2009, 9). He states that the system maintains current and historical information regarding the enrollees in benefit programs, type of coverage selected, employment status, Medicare status and personal information, and uses said information to generate billings for agencies and individuals (DuBois Affidavit, sworn to August 3, 2009, 9). He states there are over one million enrollees in NYSHIP enrollment, therefore the DCS must rely on the data reported to it by the participating agencies, in order to ensure the accuracy of the enrollment information and of billing statements (DuBois Affidavit, sworn to August 3, 2009, 6, 9). However, if an error is discovered, the DCS permits agencies to correct transactions retroactively, but said retroactivity is limited to one year (DuBois Affidavit, sworn to August 3, 2009, 11). To the extent any overpayments are made, the funds are deposited into the Health Insurance Fund as required by 167.6 of the Civil Service Law and applied as a credit to offset future premium increases (CSL 167).

Defendant states that claimant's alleged reliance upon defendant's representations in the NYSHIP Manual for Participating Agencies (Manual), which according to claimant inferred that NYBEAS will "automatically update" the Medicare status for non-active employees and their dependents who turn 65, is without merit because the "automatically update" language was not incorporated into the Manual until June 1, 2007 (DuBois Reply Affidavit, sworn to January 12, 2010, 6). Given that the claim alleges accrual dates between 1988 and 2007, defendant argues that it is clear that claimant could not have relied on it. Moreover, that section of the Manual addresses only a limited class of employees and dependents, and would not apply to employees who turned 65 while they were active but Medicare eligible.

To the contrary, defendant offers 1.7 of the current Manual which shows the requirement of the participating agency to make changes in enrollee coverage or status under the program, verify the accuracy of the monthly billing statements, and maintain up-to-date files by verifying the reconciliation listing received quarterly. Defendant also offers the 1991 version of said section, which predates the claim, to show that the agency's responsibility had not changed, except that prior to 2003, the reconciliations were annually rather than quarterly.

Defendant states that after it received a letter from claimant in or about May 2007, in which claimant's Health Benefits Administrator (HBA) inquired as to the incorrect status of various retirees and their dependents, DCS' office staff worked with claimant's HBA to review and research the records in question (DuBois Affidavit, sworn to August 3, 2009, 17). Thereafter, defendant made adjustments for up to one year's premium charge to claimant's bills dated June 1, 2007 for a number of enrollees and their dependents (DuBois Affidavit, sworn to August 3, 2009, 17). Nevertheless, by letter dated September 16, 2008, claimant alleged additional overpayments for 29 individuals, each of whom had been included in the original list transmitted in May 2007 and for whom adjustments consistent with the one-year retroactivity policy had already been made (DuBois Affidavit, sworn to August 3, 2009, 17).

In opposition to defendant's motion, claimant offers the affidavits of Abigail Smith, who was employed by claimant as the Manager of Business Operations from April 2006 to September 2009, and Rosemary Johnson, who at the time of her affidavit was employed by claimant as the Assistant Superintendent for Business. They state that defendant was provided with the dates of birth and retirement dates of all employees, and that NYSHIP should have reduced the premiums accordingly, but never did (Smith Affidavit, sworn to November 18, 2009, 8; Johnson Affidavit, sworn to November 19, 2009, 9-10). Ms. Smith alleges that this was discovered during a routine audit of claimant's expenditures in 2006 and that she thereafter spoke with a representative of NYSHIP on three occasions between March 2007 and May 2007, in an attempt to reconcile the same (Smith Affidavit, sworn to November 18, 2009, 8-9). At some point after July 10, 2007, the errors in the system were corrected and a full reconciliation of the retiree status was completed for the next quarterly billing period, but claimant was not told that a refund would be coming (Smith Affidavit, sworn to November 18, 2009, 11-12). Ms. Smith alleges that to the extent there were errors in the NYBEAS system, they were not due to a failure to provide up-to-date and accurate information on retirees, but a failure on the part of the system to "automatically update" the status of the retirees and to re-calculate their benefits (Smith Affidavit, sworn to November 18, 2009, 8). Ms. Johnson states that she discovered no credits to claimant that match the amounts Mr. DuBois raised in his affidavit, nor any credits that were issued due to Medicare eligibility overpayments (Johnson Affidavit, sworn to November 19, 2009, 11).

Subject Matter Jurisdiction

To the extent that the claim seeks to challenge the decision of DCS to not reimburse claimant for premiums it paid to NYSHIP, the Court finds that it must be dismissed based upon this Court's lack of jurisdiction.

The Court of Claims is a Court of limited jurisdiction. It does not have jurisdiction to grant strictly equitable relief (see Psaty v Duryea, 306 NY 413 [1954]). The threshold question in determining whether the Court of Claims has subject matter jurisdiction is " '[w]hether the essential nature of the claim is to recover money, or whether the monetary relief is incidental to the primary claim' "(Madura v State of New York, 12 AD3d 759 [3d Dept 2004], lv denied 4 NY3d 704 [2005], quoting Matter of Gross v Perales, 72 NY2d 231 [1988]). The second inquiry, regardless of how a claimant categorizes a claim, is whether the claim would require review of an administrative agency's determination, over which the Court of Claims has no subject matter jurisdiction to entertain (see Hoffman v State of New York, 42 AD3d 641 [3d Dept 2007]; see City of New York v State of New York, 46 AD3d 1168 [3d Dept 2007], lv denied 10 NY3d 705 [2008]). An administrative agency's determination may be reviewed only in the context of a CPLR Article 78 proceeding commenced in Supreme Court; an action cannot be brought in the Court of Claims (CPLR 7801; see Matter of Scherbyn v Wayne-Finger Lakes Bd. of Coop. Educ. Servs., 77 NY2d 753 [1991]; Matter of Salahuddin v Connell, 53 AD3d 898 [3d Dept 2008]. Although claimant alleges that it does not seek equitable relief, it appears to be primarily seeking to challenge the DCS' decision not to reimburse it for certain premiums it paid to NYSHIP and any monetary recovery would be incidental to that determination. Accordingly, this Court does not have subject matter jurisdiction over the claim (see Hoffman v State of New York, 42 AD3d 641 [3d Dept 2007]).

Failure To State A Cause Of Action

To the extent the claim alleges a cause of action based upon negligence or a breach of contract, the Court finds that it must be dismissed.

On a motion to dismiss a claim pursuant to CPLR 3211 (a) (7), the Court is required to accept the facts as alleged in the claim as true, accord claimant the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d 83 [1994]; Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314 [2002]). In making such a determination, the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one (see Guggenheimer v Ginzburg, 43 NY2d 268). A dismissal is only warranted if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law (see Leon v Martinez, 84 NY2d 83 [1994]).

In the present case, the facts do not establish that defendant had a duty or a contractual obligation to confirm and/or validate the information entered into NYBEAS by the agency's HBA. The section of the Manual upon which claimant relies in support of its position that defendant had a duty to maintain up-to-date records was amended in June 2007, after the latest accrual date as alleged in the claim; prior thereto, the information had to be manually entered into the computer system by the agency's HBA. Moreover, that section only addresses a limited class of employees and dependents, and would not apply to employees who turned 65 while they were active but Medicare eligible. Notably, the Manual which was in effect during the period of accrual shows that the HBA is responsible for verifying the accuracy of information that it is providing to NYSHIP, not defendant. In addition, the President's regulations, as set forth in 4 NYCRR 73.4, state that the participating employer, claimant herein, bears the responsibility of maintaining up-to-date lists of eligible employees, retired employees or dependents. Claimant's argument that providing the dates of birth and retirement dates of employees was sufficient for calculating premiums, is in opposition to the information the Manual indicates the agencies are required to provide.

The facts asserted by claimant also do not allege anything that would establish that defendant wrongfully converted funds or was somehow unjustly enriched. Civil Service Law 167.6 provides that the income derived from any dividends, premium rate adjustments or other refunds under any such contract or contracts shall be credited to a Health Insurance Fund and retained therein as a special reserve for adverse fluctuation in future charges under any contract or contracts. Accordingly, to the extent any overpayments were made, they did not enure to defendant's benefit.

Based on the foregoing, the Court grants defendant's motion to dismiss (M-77074), and dismisses Claim No. 116703.

CROSS-MOTION FOR LATE CLAIM RELIEF (CM-77502)

Although the Court of Claims is vested with broad discretion to grant or deny an application for permission to file a late claim (see Matter of Gonzalez v State of New York, 299 AD2d 675 [3d Dept 2002]), in making such a determination, it must determine whether the claim would be timely under Article 2 of the CPLR and then consider certain statutory factors (Court of Claims Act 10[6]), the most decisive of which is whether the claim appears to be meritorious, inasmuch as it is futile to proceed with a meritless claim (see Savino v State of New York, 199 AD2d 254 [2d Dept 1993]; Prusack v State of New York, 117 AD2d 729 [2d Dept 1986]). For the same reasons set forth above in this Court's decision on defendant's motion to dismiss, the Court finds that the claim has no merit. Accordingly, even if the Court were to determine that the initial claim was untimely, claimant's application for permission to file and serve a late claim would be denied.

April 2, 2010

Albany, New York

JUDITH A. HARD

Judge of the Court of Claims

Papers Considered:

1. Notice of Motion, dated August 5, 2009, Affirmation of Michele M. Walls, AAG, dated August 5, 2009, and Affidavit of Robert W. DuBois, sworn to August 3, 2009, with Exhibits;

2. Notice of Cross Motion, dated November 19, 2009, Affirmation of Joseph Carbonaro, Esq., dated November 27, 2009, Affidavit of Abigail Smith, sworn to November 18, 2009; Affidavit of Rosemary Johnson, sworn to November 19, 2009, with Exhibits;

3. Reply Affirmation of Michele M. Walls, AAG, in Support of Motion to Dismiss and in Opposition to Filing Late Claim Relief, dated January 13, 2010, and Reply Affidavit of Robert W. DuBois, sworn to January 12, 2010, with Exhibits.

Papers Filed: Claim, filed on April 13, 2009; Stipulation to Extend Time to Answer, filed on August 3, 2009.