[*1]
Matter of Community Related Servs. Inc. v New York State Dept. of Health
2014 NY Slip Op 51067(U) [44 Misc 3d 1209(A)]
Decided on July 14, 2014
Supreme Court, New York County
Kornreich, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on July 14, 2014
Supreme Court, New York County


In the Matter of Community Related Services, Inc., Petitioner, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules

against

New York State Department of Health, and the OFFICE OF THE MEDICAID INSPECTOR GENERAL, Respondents.




113740/2009



Nathan L. Dembin & Associates, PC, for petitioner.



Office of the Attorney General of the State of New York, for respondents.


Shirley Werner Kornreich, J.

Respondents, New York State Department of Health and the Office of the Medicaid Inspector General, move by order to show cause to vacate the court's order dated January 28, 2014 and the amended judgment entered on May 5, 2014. Petitioner Community Related Services, Inc. opposes the motion. Respondents' motion is denied for the reasons that follow.



Familiarity with the history of this action and the related Article 78 proceedings is presumed. Respondents seek vacator of the judgment for lack of subject matter jurisdiction. Specifically, respondents aver that the Supreme Court lacks jurisdiction and that the Court of Claims has exclusive jurisdiction over this action. Respondents are wrong.



"Under CPLR 7803(3), [the] Supreme Court has subject matter jurisdiction over a proceeding challenging an administrative agency determination on the ground that it was arbitrary and capricious.' However, [pursuant to CPLR 7806,] [a]ny restitution or damages granted to the petitioner must be incidental to the primary relief sought by the petitioner, and must be such as he might otherwise recover on the same set of facts in a separate action or proceeding suable in the supreme court against the same body or officer in its or his official capacity.'" Gross v Perales, 72 NY2d 231, 235 (1988) (citations omitted); see also Walton v NY State Dep't of Correctional Servs., 8 NY3d 186, 199 (2007) ("Supreme Court may award [*2]damages in an article 78 proceeding if they are incidental to the primary relief sought").



The purpose of the instant Article 78 proceeding was to adjudicate the legitimacy of respondents' withholding of approximately $7.5 million in Medicaid payments from petitioner. As set forth in the court's prior decisions, respondents' withholding of such money was improper. It has long been held that where, as here, petitioner merely seeks a court order directing payment from the State where such payment naturally and unquestionably flows from the Article 78 decision, the Supreme Court, and not the Court of Clams, has jurisdiction. See Gross, 72 NY2d at 236. In other words, the monetary judgment is considered "incidental" under CPLR 7806. Id.



The Court in Gross addressed a virtually identical jurisdictional issue and held that the Supreme Court has jurisdiction. Respondents' argument that a separate Court of Claims action is required for a monetary judgment to be entered was expressly rejected by the Court of Appeals. See id. at 237 ("The statutory language, however, does not mandate such a restrictive reading of CPLR 7806, and in enacting the statute, the Legislature never intended such an extreme result"); see also Met. Taxicab Bd. of Trade v NY City Taxi & Limousine Com'n, 115 AD3d 521, 522 (1st Dept 2014) ("incidental damages are generally confined to monies that an agency either collected from or withheld from a petitioner and then was obligated to reimburse after a court annulled a particular agency determination") (emphasis added).



This court clearly has jurisdiction to issue the subject judgment against respondents. The legitimacy of this existence of jurisdiction has been well settled for more than 25 years, and the State should know that. Its argument that the subject judgment can only be entered by the Court of Claims has long been rejected. See Gross, 72 NY2d at 234 ("where the thrust of the lawsuit is the review of an adverse State agency determination, with the monetary relief incidental, Supreme Court may entertain the entire case under CPLR article 78") (emphasis added); see also Zutt v State, 50 AD3d 1131, 1132 (2d Dept 2008) (same); Le Brun v Maguire, 12 AD3d 1007, 1008 (3d Dept 2004) ("[though petitioner] seeks incidental relief under contractual theories, i.e., reinstatement with back pay and benefits, the proceeding is, in essence, a CPLR article 78 proceeding falling within Supreme Court's subject matter jurisdiction"); Baez v Bane, 220 AD2d 166, 173 (1st Dept 1995) (in Supreme Court Article 78 proceeding, petitioner entitled to an "annulment of the decision of the State Commissioner and a refund of all funds held") (emphasis added); NY State Ass'n of Homes & Servs. for Aging Inc. v Perales, 179 AD2d 296, 298 (3d Dept 1992) ("The appropriate procedure for seeking incidental monetary relief is a CPLR article 78 proceeding").



Moreover, where monetary relief is incidental to a threshold, equitable Article 78 claim, the Court of Claims does not have jurisdiction. See Harvard Fin. Servs. Inc. v State, 266 AD2d 685, 685-86 (3d Dept 1999). Indeed, the State has consistently availed itself of this principle in procuring dismissal of adverse Court of Claims judgments. See, e.g, Green v State, 90 AD3d 1577, 1578 (4th Dept 2011); Salahuddin v Connell, 53 AD3d 898, 899-900 (3d Dept 2008); Guy v State, 18 AD3d 936, 937 (3d Dept 2005). Had petitioner commenced a Court of Claims action, the State would have likely and correctly argued that the monetary damages claim must be brought as part of the Article 78 case in Supreme Court. It, therefore, is somewhat cynical of the State to argue the converse. Accordingly, it is



ORDERED that the motion by respondents, New York State Department of Health and the Office of the Medicaid Inspector General, to vacate the judgment is denied; and it is further



ORDERED that the injunction staying enforcement of the judgment is hereby vacated, and Petitioner Community Related Services, Inc. may proceed enforcing said judgment.



Dated: July 14, 2014ENTER:



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J.S.C.