The Verified Petition and Complaint alleges that plaintiffs/petitioners Ahava Access Inc. ("Ahava") and Orion Transportation, Inc. ("Orion") were "Medicaid-enrolled transportation providers serving Brooklyn and the greater metropolitan New York City area"; and that defendant/respondent New York State Department of Health ("DOH") sent Ahava and Orion notices of termination dated April 22, 2013, notifying them that their participation in the Medicaid program was being terminated effective 30 days from the date of the notice, i.e., May 22, 2013, pursuant to 18 NYCRR § 504.7(a). Five Causes of Action are purportedly alleged.

Plaintiffs/Petitioners ("Petitioners") further allege that the respective notices of termination provide, among other things,"The Department's Division of Program Development and Management has determined that your organization has failed to adhere to the policies and standards concerning payment for transportation services provided to Medicaid enrollees", and list specific alleged deficiencies; that the stated deficiencies are "mere pretense" and were "improper"; that on May 3, 2013, Ahava and Orion requested that DOH withdraw or postpone the termination letters; that on May 20, 2013, DOH informed Ahava and Orion that it would not withdraw or postpone the effective [*2]termination date; and that the terminations have caused "significant financial harm" requiring both Ahava and Orion to "sell the vast majority of their ambulette fleet and lay off almost all of their employees". Reference herein to Plaintiffs/Petitioners as "Petitioners" and to Defendants/Respondents as "Respondents" is for convenience only, and should not be understood as the Court's determination as to the nature of any of the alleged causes of action.

Ahava and Orion allege further that two other ambulette providers owned and operated by Russian emigrees received termination letters from DOH based upon similar grounds; that "upon information and belief, only about one third of the approximate 140 Medicaid ambulette providers serving New York City are owned and operated by ethnic Russians"; that "[o]f those, Petitioners are aware of only four Medicaid ambulette providers whom DOH has attempted to terminate"; and that the "clear statistical anomaly reflects bias and the impermissible targeting of ethnic Russian-owned providers."

In their First Cause of Action, Petitioners seek judgment pursuant to CPLR § 7806 requiring Respondents to "reinstate Petitioners as transportation providers in the Medicaid program".

The Second Cause of Action for breach of contract alleges that, by licensing Petitioners as Medicaid providers, respondent DOH has entered into a contract with Petitioners; that the terms of the contract are governed by, among other things, DOH regulations including 18 NYCRR § 504.7; and that DOH breached the contract by failing to provide Petitioners with an "opportunity to be heard in the form of a hearing" pursuant to 18 NYCRR 504.7(b).

The Third Cause of Action for tortious interference with contract and business relations alleges that Respondents "were aware that termination of Petitioners from the Medicaid program would invalidate them from further business with most or all managed care plans in New York pursuant to the managed care plans' standard contracts with ambulette providers".

The Fourth Cause of Action alleges that DOH violated of 18 NYCRR § 504.7(a) in terminating Petitioners from the Medicaid program "without cause" and violated 42 CFR 431.10(e) by delegating its responsibility for "administration of the State Medicaid program" to respondent Logisticare, which is a "private entity under contract with the City of New York".

The Fifth Cause of Action alleges violation of the Equal Protection Clauses of the United States Constitution and the New York State Constitution, based upon Respondents' alleged disparate treatment of Petitioners as being owned and operated by ethnic Russians, and seeks a judgment "in a form of an Order compelling Respondents to reinstate Petitioners as transportation providers in the Medicaid program".

Defendants/Respondents New York State Department Health, Nirav Shah, New York State Commissioner of Health, and Jonathan Bick, Director, Division of OHIP Operations for the New York State Department of Health (collectively "DOH" or the "DOH Respondents"), as well [*3]as defendant/respondent Logisticare Solutions, LLC, seek an order, pursuant to CPLR §§ 7804(f) and 217, dismissing the Verified Petition and Complaint on grounds that the proceeding is barred by the four-month statute of limitations. Respondent Logisticare Solutions, LLC contends also that an article 78 proceeding does not lie against it.

As to dismissal based upon the statute of limitations, neither Petitioners nor Respondents make any distinction between the role of DOH and Logisticare Solutions, LLC in the determination to terminate Petitioners as transportation providers in the Medicaid program, and the Court will not make any such distinction for that purpose. In this regard, Petitioners contend that Logisticare is an "agent" of DOH, and that their "requested relief must apply to Logisticare as well as the DOH Respondents". (See Petitioners' Memorandum of Law in Opposition to Respondents' Motions to Dismiss at 7.)

"A proceeding pursuant to CPLR article 78 must be commenced within four months after the determination to be reviewed becomes final and binding upon the petitioner' (CPLR 217[1])." (Matter of Silvestri v Hubert, 106 AD3d 924, 924-25 [2d Dept 2013].) "A strong public policy underlies the abbreviated statutory time frame: the operation of government agencies should not be unnecessarily clouded by potential litigation." (See Matter of Best Payphones, Inc. v Department of Information Telecommunications of the City of New York, 5 NY3d 30, 34 [2005].)

The "two requirements for fixing the time when agency action is final and binding upon the petitioner' " are: (1) "the agency must have reached a definitive position on the issue that inflicts actual, concrete injury"; and (2) "the injury inflicted may not be prevented or significantly ameliorated by further administrative action or by steps available to the complaining party." (See id.) "If an agency creates any ambiguity as to whether its decision is final and binding, courts should resolve that ambiguity against the agency, and reach the merits of the controversy." (Matter of Board of Educ. of the Kiryas Joel Village Union Free School Dist. v State of New York, 110 AD3d 1231, __, 2013 NY Slip Op 06770, *2-3 [3d Dept 2013].)

"A determination generally does not become binding until the aggrieved party is notified'." (Matter of Silvestri v Hubert, 106 AD3d at 925; see also Matter of Working Families Party v Fisher, 109 AD3d 478, 480 [2d Dept 2013]; Matter of Pirrone v Town of Wallkill, 6 AD3d 447, 448 [2d Dept 2004][determination to terminate benefits held to be final and binding on date that petitioner was notified of the determination as opposed to the effective date of the termination of benefits].) "The burden rests on the party seeking to assert the statute of limitations as a defense to establish that the petitioner was provided notice of the determination more than four months before the proceeding was commenced." (Id.; see also Matter of Working Families Party v Fisher, 109 AD3d at 479].)

"A four-month statute of limitations applies if the gravamen of plaintiff's action and the relief sought may be properly addressed in a CPLR article 78 proceeding," regardless of the label that the petitioner or plaintiff assigns to the cause of action. (See Bango v Gouverneur Volunteer [*4]Rescue Squad, Inc., 101 AD3d 1556, 1557 [3d Dept 2012].) Where the "essence" of a petitioner's challenge "is directed at the specific acts of the administrative agency", the cause of action is "properly reviewed in the context of a CPLR article 78 proceeding". (See Matter of Mangini v Christopher, 290 AD2d 740, 746 [3d Dept 2002]; see also Block 3066, Inc., 89 AD3d 655, 656 [2d Dept 2011]; Marsh v New York State and Local Employees' Retirement System, 291 AD2d 713, 714 [3d Dept 2002]["characterizing the matter as one of constitutional and contractual dimension does not cure this fatal inaction on the plaintiffs' part"]; Matter of Roebling Liquors, Inc. v Urbach, 245 AD2d 829, 830 [3d Dept 1997] ["a party may not assert constitutional claims in an attempt to subvert the Statute of Limitations provided by CPLR 217 when the essence of the party's challenge is to the specific actions of an administrative agency"]; Matter of Lion Construction Corp. v New York State Department of Labor, 266 AD2d 394, 395 [2d Dept 1999].)

Here, a review of the Verified Petition and Complaint establishes that the essence of all of Petitioners' alleged causes of action, excepting (for the moment) the Fifth Cause of Action, including their purported tort and breach of contract causes of action, constitute a challenge to the determination of the DOH Respondents to terminate Petitioners as transportation providers in the Medicaid program. (See Block 3066, Inc., 89 AD3d at 656; Marsh v New York State and Local Employees' Retirement System, 291 AD2d at 714; Matter of Roebling Liquors, Inc. v Urbach, 245 AD2d at 830.) As such, those causes of action are properly reviewed in the context of a CPLR article 78 proceeding, and are subject to the related four-month statute of limitations.

Respondents proffer certified mail receipts and confirmations of delivery of the notices of termination sent to each of the Petitioners, to the effect that they each received the Notices of Termination on April 24, 2013. Each of the Notices of Termination, dated April 22, 2013, sent to Ahava and Orion provides that "DOH is terminating your participation in the New York State Medicaid Program" and that "[e]ffective 30 days from the date of this letter, your participation in the New York State Medicaid Program will terminate". The language used in the Notices of Termination "left no doubt" that DOH had reached a definitive position regarding Petitioners' termination as providers in the Medicaid program "that inflicted actual, concrete injury" to them. (See Matter of Best Payphones, Inc. v Department of Information Telecommunications of the City of New York, 5 NY3d at 3.) The determination to terminate Petitioners as transportation providers in the Medicaid program is deemed to be final and binding on the date of receipt of the Notices of Termination, as opposed to the effective date of termination. (See Matter of Pirrone v Town of Wallkill, 6 AD3d at 448.)

The instant proceeding/action was commenced on September 23, 2013, which is more than four months after Petitioners were notified of DOH's determination. As such, Respondents sufficiently demonstrate prima facie that the proceeding/action is time-barred pursuant to CPLR 217.

In opposition, Petitioners contend, among other things, that the proceeding/action is not time-barred, based upon communications after receipt of the April 22, 2013 Notices of [*5]Termination. By letter dated May 8, 2013, submitted on behalf of petitioner Orion, and by letter dated May 3, 2013, submitted on behalf of Ahava, Petitioners requested Jonathan Bick of DOH to withdraw the Notices of Termination and for an extension of time to obtain additional information. In response, by letters dated May 21, 2013, Jonathan Bick informed Orion and Ahava that, among other things, "Your request has been reviewed" and the "Department's termination will not be withdrawn or postponed."

Contrary to Petitioners' contentions, any indication in DOH's May 21 letter that it "reviewed" Petitioners' requests in their letters dated, respectively, May 3 and May 8 did not alter the finality of DOH's determination made in April so as to toll the running of the Statute of Limitations. (See e.g. Matter of Eldaghar v New York City Housing Authority, 34 AD3d 326, 327 [1st Dept 2006]; Matter of Saferstein v Lawyers' Fund for Client Protection, 298 AD2d 726, 727 [3d Dept 2002].)

The Court concludes, therefore, that the First, Second, Third, and Fourth Causes of Action in the Verified Petition and Complaint are time-barred. To the extent that respondent Logisticare Solutions, LLC contends that an article 78 proceeding does not lie against it, the contention is rendered moot by the dismissal of those Causes of Action on statute-of-limitations grounds. Moreover, since the Fifth Cause of Action is expressly alleged only against the DOH Respondents, the Verified Petition and Complaint must be dismissed in its entirety as against respondent Logisticare Solutions.

Petitioners' Fifth Cause of Action alleges that the DOH Respondents violated the equal protection clauses of the U.S. and New York State Constitutions "by singling out Petitioners for disparate treatment from others [sic] similarly situated Medicaid providers for no rational reason," and "because of the national origin of Petitioners' owners and operators." (See Verified Petition and Complaint ¶¶ 78, 79.) On this motion, the DOH Respondents do not contend that "the pleading fails to state a cause of action" against them (see CPLR 3211[a][7].)

The procedural viability of the so-called "hybrid" action, i.e., a "combined declaratory judgment action and CPLR article 78 proceeding," seems established. (See Walton v New York State Dept. of Correctional Servs, 8 NY3d 186, 193 [2007].) "Whether . . . constitutional claims are subject to the four-month statute of limitations period under CPLR article 78 or the residuary six-year limitations period of CPLR 213(1) turns on whether the parties' rights could have been resolved in an article 78 proceeding." (Id. at 194.) "[I]f the claim could have been made in a form other than an action for a declaratory judgment and the limitations period for an action in that form has already expired, the time for asserting the claim cannot be extended through the simple expedient of denominating the action one for declaratory relief." (New York City Health & Hosps. Corp. v McBarnette, 84 NY2d 194, 201 [1994].) But that rule "does not require . . . that all proceedings challenging State actions be commenced within four months." (See Koerner v State of New York, 62 NY2d 442, 447 [1984].)

And so, "a judicial action for discriminatory discharge commenced pursuant to the [*6]Human Rights Law is governed by a three-year Statute of Limitations," and the court "need look no further to determine whether a shorter period might be applicable had plaintiff attempted to have his rights adjudicated by some other procedure." (See id.) Similarly, in a "hybrid action" where the petition raises claims under 42 USC §1983, those claims are governed by a three-year statute of limitations, rather than the four-month statute. (See Mulcahy v New York City Dept. of Educ., 99 AD3d 535, 536 [1st Dept 2012]; Legal Aid Society v City of New York, 242 AD2d 423, 424-26 [1st Dept 1997]; see also D & S Realty Dev. v Town of Huntington, 295 AD2d 306, 307 [2d Dept 2002].)

Petitioners appropriately analogize their Fifth Cause of Action to claims under the Human Rights Law and pursuant to 42 USC §1983, stating that they "are challenging a patently-unconstitutional pattern and practice of targeting Medicaid transportation providers based on their ethnicity." (See Petitioners' Memorandum of Law in Opposition to Respondents' Motion to Dismiss at 5-6.)

To the extent that the Fifth Cause of Action alleges disparate treatment because of ethnicity, it is not governed by the four-month statute. The result is not so clear to the extent Petitioners allege a violation of equal protection based upon "rational basis" review (see Verified Petition and Complaint ¶78), which is, at the least, similar to the "arbitrary and capricious" standard of review applied in article 78 proceedings (see CPLR 7803[3].) Since, however, the parties have not addressed the issue, neither will the Court.

Although the Fifth Cause of Action will not now be dismissed, it does not follow that Petitioners are entitled to preliminary injunctive relief (see CPLR 6301.) "The party seeking a preliminary injunction must demonstrate a probability of success on the merits, danger of irreparable injury in the absence of an injunction and a balance of equities on its favor." (Nobu Next Door, LLC v Fine Arts Hous. Inc., 4 NY3d 839, 839-40 [2005].) Although Petitioners demonstrate the effect on their respective businesses of termination of their status as transportation providers under Medicaid, they do not show a probability of success on the merits on their equal protection claims.

The respective motions of Respondents are granted only to the extent that the First, Second, Third, and Fourth Causes of Action in the Verified Petition and Complaint are dismissed, and, as to respondent Logisticare Solutions, LLC, so is the Fifth Cause of Action. Respondent Logisticare may enter judgment accordingly.

The motion of the DOH Respondents is denied as to the Fifth Cause of Action, and they shall serve their answers no later than December 20.

To the extent that the Verified Petition and Complaint seeks preliminary injunctive relief, it is denied.

November 22, 2013[*7]

Jack M. Battaglia

Justice, Supreme Court