                          State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: January 28, 2016                   519940
________________________________

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

HOWARD A. ZUCKER, as
   Commissioner of Health,
   et al.,
                    Appellants.
________________________________


Calendar Date:   November 19, 2015

Before:   Peters, P.J., Lahtinen, Garry, Rose and Clark, JJ.

                             __________


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

      Whiteman Osterman & Hanna, LLP, Albany (Robert S.
Rosborough IV of counsel) and Nancy R. Stormer, Utica, for
respondent.

                             __________


Lahtinen, J.

      Appeal from a judgment of the Supreme Court (Lambert, J.),
entered October 3, 2014 in Delaware County, which, among other
things, partially 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
respondent Department of Health denying petitioner's claims for
certain Medicaid reimbursements.

      The issues in this Medicaid reimbursement case are largely
controlled by a series of recent decisions of this Court, which
                              -2-                519940

were decided after Supreme Court's decision. Although Supreme
Court incorrectly declared that the 2012 amendment to the
Medicaid Cap Statute (see L 2012, ch 56, § 1, part D, § 61) was
unconstitutional (see Matter of County of St. Lawrence v Shah,
124 AD3d 88, 92 [2014], lv granted 25 NY3d 903 [2015]; see also
Matter of County of Chemung v Shah, 124 AD3d 963, 964 [2015], lv
granted 25 NY3d 903 [2015]), it properly concluded that
petitioner was entitled to reimbursement for pre-2006 overburden
expenses since such claims were submitted within the six-month
grace period (see Matter of County of Broome v Shah, 130 AD3d
1347, 1347 [2015]; Matter of County of Chemung v Shah, 124 AD3d
at 964). "[R]espondents' 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" (Matter of County of Chemung v Shah, 124 AD3d at 964;
see Matter of County of Broome v Shah, 130 AD3d at 1347-1348).
Finally, we agree with respondents that Supreme Court erred in
directing them to pay interest on the reimbursement payments (see
Signature Health Ctr., LLC v State of New York, 92 AD3d 11, 17
[2011], lv denied 19 NY3d 811 [2012]; Concourse Nursing Home v
State of New York, 1 AD3d 675, 677 [2003], lv denied 2 NY3d 704
[2004]).

     Peters, P.J., Garry, Rose and Clark, JJ., concur.
                              -3-                  519940

      ORDERED that the judgment is modified, on the law, without
costs, by reversing so much thereof as (1) declared L 2012, ch
56, § 1, part D, § 61 to be unconstitutional, and (2) awarded
interest, and, as so modified, affirmed.




                             ENTER:




                             Robert D. Mayberger
                             Clerk of the Court
