                          State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: January 8, 2015                   518222
________________________________

In the Matter of COUNTY OF
   CHEMUNG,
                    Respondent,
      v                                     MEMORANDUM AND ORDER

NIRAV R. SHAH, as Commissioner
   of Health, et al.,
                    Appellants.
________________________________


Calendar Date:   November 17, 2014

Before:   Peters, P.J., Rose, Egan Jr. and Lynch, JJ.

                             __________


      Eric T. Schneiderman, Attorney General, Albany (Victor
Paladino of counsel), for appellants.

      Whiteman Osterman & Hanna, LLP, Albany (Christopher E.
Buckey of counsel) and Nancy Rose Stormer, PC, Utica (Nancy Rose
Stormer of counsel), for respondent.

                             __________


Lynch, J.

      Appeal from a judgment of the Supreme Court (O'Shea, J.),
entered November 21, 2013 in Chemung County, which granted
petitioner's application, in a combined proceeding pursuant to
CPLR article 78 and action for declaratory judgment, to, among
other things, annul a determination of respondents' denying
petitioner's claims for certain Medicaid reimbursements.

      Petitioner commenced this combined CPLR article 78
proceeding and declaratory judgment action seeking, in part, to
annul a determination of respondent Department of Health
(hereinafter DOH) denying its May 2013 claim for reimbursement of
                                 -2-                518222

pre-2006 overburden expenditures pursuant to Social Services Law
§ 368-a. Supreme Court, among other things, granted the petition
to annul DOH's determination and compelled respondents to
reimburse petitioner for the pending claims, as well as all
remaining overburden reimbursements that may still be due
pursuant to Social Services Law § 368-a (1). Respondents appeal.

      At issue is the constitutionality of the April 1, 2012
amendment to the so-called Medicaid Cap Statute (see L 2005, ch
58, § 1, part C, § 1), which purported to immediately bar any
further claims of counties for reimbursement of overburden
expenses (see L 2012, ch 56, § 1, part D, § 61) (hereinafter the
2012 amendment). On November 26, 2014, this Court decided, in
Matter of County of St. Lawrence v Shah (___ AD3d ___, 2014 NY
Slip Op 08278 [2014]), that the 2012 amendment was not
unconstitutional, and we established a six-month grace period
from the date of the decision authorizing "any social services
district to file a claim for reimbursement of any pre-2006
overburden expenditures, with the 2012 amendment barring as
untimely any claims submitted thereafter" (id. at *3). We also
determined that "Supreme Court did not err in directing DOH to
identify, verify and pay the total unpaid overburden expenditures
that petitioner incurred prior to 2006" (id.).1

      Applied here, these principles confirm that Supreme Court
properly granted petitioner's application, except insofar as the
court declared the 2012 amendment unconstitutional. We also note
that, as in Matter of the County of St. Lawrence v Shah (supra),
respondents' challenge to petitioner's capacity to bring this
claim was waived by respondents' failure to raise capacity as a
defense in their answer or a pre-answer motion to dismiss (id. at
*2).

         Peters, P.J., Rose and Egan Jr., JJ., concur.




     1
        At oral argument counsel acknowledged that this matter
involves the same issue presented in Matter of County of St.
Lawrence v Shah (supra).
                              -3-                  518222

      ORDERED that the judgment is modified, on the law, without
costs, by reversing so much thereof as declared L 2012, ch 56,
§ 1, part D, § 61 to be unconstitutional; it is declared that L
2012, ch 56, § 1, part D, § 61 is constitutional with a grace
period of six months commencing November 26, 2014; and, as so
modified, affirmed.




                             ENTER:




                             Robert D. Mayberger
                             Clerk of the Court
