Constitutional Law - Validity of Statute - Prohibition on Laws Granting Exclusive Privilege or Franchise - Consumer Directed Personal Assistance Program - Statute Requiring Award of Contract to Single Statewide Fiscal Intermediary

State - Bids and Bidders - Request for Proposal - Applicability of State Administrative Procedure Act

Featherstonhaugh, Clyne & McCardle, LLP, Albany (Jonathan S. McCardle of counsel), for Public Partnerships LLC, respondent.

Letitia James, Attorney General, Albany (Mark G. Mitchell of counsel), for James V. McDonald, M.D., in his capacity as the Commissioner of the New York State Department of Health, and others, respondents.

Hodgson Russ LLP, Buffalo (Peter C. Godfrey, Christopher Massaroni, John M. Godwin, Jennifer E. Brevorka and William G. Fassuliotis of counsel), for petitioner.

A&J Staffing, Inc. doing business as Direct Care (petitioner), a corporation that provides fiscal intermediary (FI) services under the Consumer Directed Personal Assistance Program (CDPAP), commenced this hybrid CPLR article 78 proceeding/declaratory judgment action against James V. McDonald, M.D., in his capacity as the Commissioner of the New York State Department of Health, the New York State Department of Health (DOH), and the State of New York (collectively, the State respondents). Petitioner challenges the constitutionality of Social Services Law § 365-f, as amended by part HH of section 1 of chapter 57 of the Laws of 2024, which required respondent Commissioner to award a contract to a single statewide fiscal intermediary (SFI), as well as the propriety of DOH's request for proposal (RFP) process to procure the contract. The contract was ultimately awarded to respondent Public Partnerships LLC (PPL).

Pending before the court are the separate motions to dismiss the petition/complaint of PPL (mot No. 2) and the State respondents (mot No. 3). Petitioner opposed the motions. For the reasons that follow, respondents' motions (mot Nos. 2, 3) are granted, as set forth herein; the declaratory relief pursuant to article III, § 17 of the New York State Constitution is granted in favor of the State respondents; the remaining relief requested in the petition/complaint is in all other respects denied; and the proceeding/action is dismissed.

A. CDPAP and the 2024 Amendment

CDPAP is a Medicaid service that allows "chronically ill and/or physically disabled individuals receiving home care services under the medical assistance program greater flexibility and freedom of choice in obtaining such services" provided by a "personal assistant" (Social Services Law § 365-f [1], [3]). Prior to the enactment of part HH of section 1 of chapter 57 of the Laws of 2024, participating individuals were permitted to contract directly with FIs, which performed an array of administrative employment-related services on behalf of{**87 Misc 3d at 873} participating individuals relative to their personal assistants, as well as ensured compliance with the Medicaid program (see Social Services Law § 365-f; 18 NYCRR 505.28). Petitioner is one of the approximately 600 businesses that provided administrative and financial services in the CDPAP as an FI under the pre-amendment framework of Social Services Law § 365-f.

As relevant, part HH of section 1 of chapter 57, enacted by the New York State Legislature as part of the 2024 budget, amended Social Services Law § 365-f to replace "fiscal intermediaries" with a "Statewide Fiscal Intermediary" such that, effective April 1, 2025, the many previously operating FIs will be replaced with the single SFI, PPL.

B. Procurement of the SFI Contract

To obtain the SFI, the statute required respondent Commissioner of DOH to enter into a [*2]contract with a single eligible provider through a bidding process. The amended statute expressly exempted the bidding process from the requirements of State Finance Law §§ 112 and 163 and Economic Development Law § 142 (see Social Services Law § 365-f [4-a] [b]). DOH was, however, required to post to its website a description of the services the SFI will provide, the minimum criteria for selection of the SFI, and the manner for submitting proposals (see id. § 365-f [4-a] [b] [i] [A]-[C]). In particular, section 365-f provides,

"the criteria for selection of the statewide fiscal intermediary . . . shall include at a minimum that the eligible contractor is capable of performing statewide fiscal intermediary services with demonstrated cultural and language competencies specific to the population of consumers and those of the available workforce, has experience serving individuals with disabilities, and as of April [1, 2024,] is providing services as a fiscal intermediary on a statewide basis with at least one other state" (see id. § 365-f [4-a] [b] [i] [B]).

The statute also required DOH to post to its website that "all offers that are received from prospective contractors in a timely fashion and that meet the criteria set forth in clause (B) of subparagraph (i) of this paragraph shall be reviewed by the commissioner" and that "the commissioner shall award such contract to the contractor that meets the criteria for selection and offers the best value for providing the services required{**87 Misc 3d at 874} pursuant to this section and the needs of consumers" (id. § 365-f [4-a] [b] [ii], [iii]).

To procure bids for the SFI contract, DOH issued request for proposals (RFP) No. 20524 on June 17, 2024, an approximately 35-page document that, as relevant, provided that the contract term for the SFI will be "five (5) years commencing on the date the contract is approved by the Commissioner" and included the minimum bidder qualifications which mirrored the minimum qualification set forth under Social Services Law § 365-f (4-a) (b) (i) (B) (see NY St Cts Elec Filing [NYSCEF] Doc No. 73 at 5). Three amendments to the RFP were issued between July 19 and August 7, 2024 (see NYSCEF Doc Nos. 74-76). Amendment No. 2, issued on August 2, 2024, extended the deadline for the submission of proposals from August 16 to August 21, 2024, as well as the date for DOH's response to written questions from August 2 to August 7, 2024 (see NYSCEF Doc No. 75).

In accordance with amendment No. 2, DOH issued a questions and answers document on August 7, 2024 (see NYSCEF Doc No. 119). That document included numerous questions requesting clarification of the minimum criteria of providing "statewide" FI services in another state, including whether the "statewide" experience criteria would require the successful bidder to "hav[e] the exclusive statewide contract in that state, as opposed to sharing the contract with multiple entities"; whether "having a statewide contract but lacking significant consumer enrollment or service experience in various geographic regions due to other entities holding concurrent statewide contracts and thus serving specific regions" would be sufficient; "[h]ow does [DOH] define and measure 'statewide experience' to ensure the chosen entity has comprehensive service capabilities across the entire state?"; and "[h]ow is the term 'statewide basis' defined? What criteria is DOH using in determining whether a provider is, as of April 1, 2024, providing services as a fiscal intermediary 'on a statewide basis' in another state?" (Id. at 28; see also id. at 26, 27.) DOH referred these and other related inquires regarding the "statewide" criteria to amendment No. 3 to the RFP.

Amendment No. 3, also issued on August 7, 2024, in relevant part, provided the following additional language relative to the "statewide" criteria for the minimum bidding requirements:

"For the purposes of this minimum qualification, 'statewide basis in at least one other [*3]state' means {**87 Misc 3d at 875}that the entity is currently engaged in a contract with the single State agency established or designated to administer or supervise the administration of the State's Medicaid program in a state other than New York, to be a provider of fiscal intermediary services throughout the entire geographic area of the subject state" (NYSCEF Doc No. 76 at 3).

On August 21, 2024, petitioner submitted its proposal for the SFI contract to DOH (see NYSCEF Doc Nos. 85, 86). On September 30, 2024, DOH sent petitioner a letter advising that, upon DOH's "compliance review" of petitioner's proposal, it determined that petitioner "did not meet the Minimum Qualification requirements as outlined" in amendment No. 3 and, therefore, "disqualified [petitioner's] proposal" (NYSCEF Doc No. 70 at 2, 3).

C. Procedural History

Petitioner commenced the present hybrid CPLR article 78 proceeding/declaratory judgment action by order to show cause, signed December 19, 2024 (see NYSCEF Doc No. 50). Petitioner then moved by separate order to show cause, filed January 15, 2025, for leave to amend its petition/complaint to add PPL as a respondent (see NYSCEF Doc No. 52). By so-ordered stipulation, executed January 17, 2025, the parties agreed to permit petitioner to amend its petition/complaint and to adjourn the return date to February 14, 2025 (see NYSCEF Doc No. 64).

Petitioner, through its amended verified petition/complaint, seeks, as relevant,^[FN1] to permanently enjoin implementation of PPL's contract and enjoin the State respondents from acting under Social Services Law § 365-f; annul and vacate PPL's contract; and declare Social Services Law § 365-f unconstitutional and unenforceable in violation of article III, § 17 of the New York State Constitution. Petitioner claims that DOH violated the State Administrative Procedure Act; made errors of law, acted arbitrarily and capriciously, and abused its discretion{**87 Misc 3d at 876} in promulgating amendment No. 3 to the RFP and relying on the additional eligibility criteria to disqualify petitioner's bid; and deprived petitioner of its procedural due process rights under the State and Federal Constitutions. And petitioner seeks expedited discovery and attorneys' fees and costs (see NYSCEF Doc No. 1).

State respondents move pre-answer to dismiss the petition/complaint for failure to state a cause of action pursuant to CPLR 7804 (f), 3001, and 3211 (a) (2), (7). PPL separately moves to dismiss pursuant to CPLR 7804 (f) and 3211 (a) (7). Oral argument was held on March 21, 2025.

A. The petition/complaint must be dismissed as against PPL for failure to state a [*4]cause of action.

PPL moves to dismiss the petition/complaint as against it on the ground that petitioner asserts no allegations against PPL. Petitioner does not seriously dispute PPL's position. And upon careful review of petitioner's submissions, the court agrees that petitioner has not asserted any factual allegations against PPL sufficient to state a cause of action. Consequently, the petition/complaint is dismissed insofar as asserted against PPL (see CPLR 7804 [f]; 3211 [a] [7]).

B. The court may properly determine the merits of this hybrid proceeding/action regarding petitioner's claims against the State respondents.

As a preliminary matter, the court may summarily determine the merits of this hybrid proceeding/action. Even if, as in the present proceeding/action, the respondent/defendant does not file an answer, "where the facts are so fully presented in the papers of the respective parties that it is clear that no dispute as to the facts exists and no prejudice will result from the failure to require an answer," the court may resolve the matter on the merits (Matter of Source Renewables, LLC v Town of Cortlandville Zoning Bd. of Appeals, 213 AD3d 1178, 1180 [3d Dept 2023] [internal quotation marks omitted] [applying this analysis in hybrid CPLR article 78/plenary action]; see Matter of 22-50 Jackson Ave. Assoc., L.P. v County of Suffolk, 216 AD3d 939, 942 [2d Dept 2023] [same analysis applied in hybrid CPLR article 78/declaratory judgment action], lv denied 41 NY3d 905 [2024]).

The State respondents have moved pre-answer to dismiss the amended petition/complaint, and petitioner has requested{**87 Misc 3d at 877} discovery. But the record before the court contains voluminous evidentiary submissions, and the parties' arguments are fully set forth in their pleadings and motion papers. Notwithstanding petitioner's challenge to the propriety of a merits determination when the court raised this issue during oral argument, the court concludes that "the facts are so fully presented in the papers of the respective parties that it is clear that no dispute as to the facts exists and no prejudice will result from a summary determination" (Matter of Hudson v Town of Orchard Park Zoning Bd. of Appeals, 218 AD3d 1380, 1382 [4th Dept 2023] [internal quotation marks omitted]; see Matter of Source Renewables, 213 AD3d at 1180; Matter of 22-50 Jackson Ave. Assoc., L.P., 216 AD3d at 942).

C. Merits

1. State respondents are entitled to a declaration that Social Services Law § 365-f, as amended by part HH of section 1 of chapter 57 of the Laws of 2024, does not violate article III, § 17 of the New York State Constitution.

Petitioner asserts five causes of action in its amended petition/complaint. Petitioner's first cause of action seeks a declaration that part HH of section 1 of chapter 57 of the Laws of 2024 is unconstitutional on its face as violative of article III, § 17 of the New York State Constitution because it granted PPL an "exclusive privilege . . . or franchise." Petitioner contends that the legislature, in effect, rigged the bidding process by setting the minimum requirements for the SFI so as to ensure that the contract was awarded to PPL. Petitioner also alleges that, in administering the RFP under Social Services Law § 365-f as amended, DOH committed an error [*5]of law, acted arbitrarily and capriciously, and abused its discretion pursuant to CPLR 7803.

State respondents argue in opposition that the amendment to Social Services Law § 365-f is not directed at a single entity. They point out that DOH found that four bidders—not just PPL—met the minimum qualifications and passed the compliance evaluation, and deemed them eligible to bid, and that the amendment to Social Services Law § 365-f and ensuing award did not grant PPL an exclusive right or privilege in violation of article III, § 17. And, State respondents posit, the minimum qualifications under the statute are supported by a rational basis.

"Article III, § 17 prohibits the Legislature from adopting a 'private or local bill' " " '[g]ranting to any private corporation{**87 Misc 3d at 878}  . . . any exclusive privilege, immunity or franchise whatever' " (Consumers Union of U.S., Inc. v State of New York, 5 NY3d 327, 360 [2005], quoting NY Const, art III, § 17). To establish a violation of article III, § 17, the challenged "bill must be directed at a single entity" and "must confer a privilege upon the single entity to the exclusion of all others" (id. at 360-361). A party mounting a facial challenge of a state law must "surmount the presumption of constitutionality accorded to legislative enactments by proof beyond a reasonable doubt" (Matter of Walt Disney Co. & Consol. Subsidiaries v Tax Appeals Trib. of the State of N.Y., 42 NY3d 538, 550 [2024], certs denied 604 US —, 145 S Ct 1125 [Jan. 21, 2025], 604 US —, 145 S Ct 1126 [Jan. 21, 2025]). "To do so, they bear the substantial burden of demonstrating that in any degree and in every conceivable application, the law suffers wholesale constitutional impairment. In other words, [petitioner] must establish that no set of circumstances exists under which the [law] would be valid" (id. [internal quotation marks and citation omitted]).

Petitioner's exclusive privilege/franchise argument fails. Petitioner has not met its substantial burden of showing that the challenged legislation was directed at a single corporation (cf. Consumers Union of U.S., 5 NY3d at 344 [upholding the denial of request for declaratory judgment that the legislature violated article III, § 17 of the State Constitution by enacting chapter 1 of the Laws of 2002 for, among other stated purposes, "allow(ing) (Empire HealthChoice, Inc.) to convert to a for-profit corporation"]). The challenged statute makes no reference to PPL. Rather, PPL won the bid conducted through the RFP process against three other eligible entities. And though petitioner makes much of the eligibility criteria, it completely disregards that PPL also met the third requirement under Social Services Law § 365-f (4-a) (b)—that the successful bidder offer the best value for providing the services required under the statute and the needs of consumers.

Nor can petitioner establish that the challenged legislation confers an exclusive privilege upon PPL. True, PPL won the contract to serve as the single SFI. But the CDPAP is only one of many programs the State operates under the state/federal Medicaid partnership. The statute contemplates the SFI's use of subcontractors to accomplish its statutory function. Further, the contract is only for a five-year term, and nothing in the record evinces that PPL is ensured to continue in its status as the{**87 Misc 3d at 879} SFI in perpetuity to permit the conclusion that this is "the type of 'exclusivity' that [article III, § 17] was meant to prohibit" (Greater N.Y. Taxi Assn. v State of New York, 21 NY3d 289, 308 [2013]).

Petitioner's contention that the challenged legislation was inferentially directed at PPL does not carry the day. This contention ignores that PPL ultimately won the bidding process against three other qualified bidders. And petitioner's evidentiary proffers in support of this contention—namely isolated statements of individual legislators—are woefully lacking. [*6]Statements of individual legislators, though possibly indicative of their personal viewpoints, are of little value for assessing a duly enacted statute—a process that requires the action of the legislative body as a whole.^[FN2] As are the news articles and other, similarly opinion-based commentary petitioner cites in support of its speculative argument that the legislation was "reverse engineered" to ensure PPL won the bid. "[I]solated statements of . . . individual legislators—and, more so, non-legislators—contained within the legislative history cannot establish legislative intent" (Kuzmich v 50 Murray St. Acquisition LLC, 34 NY3d 84, 94 [2019] [internal quotation marks and citation omitted]; see also Whitehead v Pine Haven Operating LLC, 222 AD3d 104, 108 [3d Dept 2023]). As such, the court finds this contention to be without merit.

As no factual issues exist with respect to petitioner's cause of action regarding the constitutionality of the statute as challenged under article III, § 17 of the State Constitution, the appropriate course is a declaration of rights in State respondents' favor (see Grand S. Point, LLC v Bassett, 230 AD3d 49, 59 [3d Dept 2024], appeal dismissed 42 NY3d 1025 [2024]). Accordingly, it is declared that Social Services Law § 365-f, as amended by part HH of section 1 of chapter 57 of the Laws of 2024, does not violate article III, § 17 of the New York State Constitution. Moreover, to the extent petitioner argues that respondents committed an error of law, acted arbitrarily and capriciously, and abused their discretion by administering the RFP pursuant to the amended CDPAP statute on the ground that part HH of section 1 of chapter 57 of the Laws of 2024 violates article III, § 17, its first cause of action is dismissed as without merit.{**87 Misc 3d at 880}

2. The State Administrative Procedure Act's rulemaking procedures are inapplicable to the RFP.

Petitioner's second cause of action alleges that the additional language added to clarify the phrase "statewide basis in at least one other state" in amendment No. 3 to the RFP constituted a "rule" subject to the State Administrative Procedure Act's rulemaking procedures. Petitioner also contends that DOH committed an error of law, acted in an arbitrary and capricious manner, and abused its discretion by relying on amendment No. 3 to disqualify its bid. State respondents rejoin that the qualifications set forth in the RFP did not constitute a "rule" subject to the State Administrative Procedure Act's rulemaking procedures.

The court agrees with State respondents. Contrary to petitioner's attempt to contort the issue, the rulemaking procedures of the State Administrative Procedure Act are not implicated by the RFP. Social Services Law § 365-f, as amended, set forth the methods pursuant to which the Commissioner of DOH was to engage in procurement efforts to contract with the SFI and expressly exempted the Commissioner from the bidding requirements of the State Finance Law and the Economic Development Law. To that end, the Commissioner chose the RFP process, which "is a more flexible alternative to competitive bidding" (Matter of Madison Sq. Garden, L.P. v New York Metro. Transp. Auth., 19 AD3d 284, 286 [1st Dept 2005]).

DOH incorporated the "minimum" eligibility criteria set forth in Social Services Law § 365-f (4-a) essentially verbatim into the original RFP (see NYSCEF Doc No. 73 at 5). Only after the submission of questions, including numerous inquiries regarding DOH's interpretation of the phrase "statewide basis in at least one other state," did DOH issue amendment No. 3 to clarify the minimum requirements regarding "statewide" experience (see NYSCEF Doc No. 114 ¶ 33; [*7]NYSCEF Doc No. 76 at 3).^[FN3] DOH did so pursuant to its express authority under Social Services Law § 365-f (4-a) (b) (i) (B).

{**87 Misc 3d at 881}And petitioner cites no relevant authority to establish that DOH even had any obligation to provide clarification to the eligibility criteria contained in amendment No. 3. An RFP "need not spell out every single factor" nor is there any "legal requirement . . . that the final contracts must conform to the original RFP" (Matter of Madison Sq. Garden, L.P., 19 AD3d at 286). Indeed, though petitioner half-heartedly argues that exempting the procurement process from State Finance Law § 163 "eliminated a layer of transparency" (NYSCEF Doc No. 1 ¶ 39), that statute "does not require particularization, but only generalization" with respect to evaluation criteria contained in an RFP (Matter of Transactive Corp. v New York State Dept. of Social Servs., 236 AD2d 48, 53 [3d Dept 1997], citing State Finance Law § 163 [9] [b], affd on other grounds 92 NY2d 579 [1998]). In any event, the challenged language in amendment No. 3, to the extent it could be read as adding additional criteria, simply constitutes "more specific factors subsumed within the [initial minimum] criteria" relative to "statewide" experience (id.).

The State Administrative Procedure Act has no application here. The State Administrative Procedure Act defines a "rule" as "the whole or part of each agency statement, regulation or code of general applicability that implements or applies law, or prescribes a fee charged by or paid to any agency or the procedure or practice requirements of any agency" (State Administrative Procedure Act § 102 [2] [a] [i]). The State Administrative Procedure Act requires, as relevant, that "[p]rior to the adoption of a rule, an agency shall submit a notice of proposed rule making to the secretary of state for publication in the state register and shall afford the public an opportunity to submit comments on the proposed rule" (see State Administrative Procedure Act § 202 [1] [a]). The bid specifications here are not a "rule."

Matter of Alca Indus. v Delaney (92 NY2d 775 [1999]) is instructive. The petitioners in Alca challenged certain criteria set forth in the Office of General Services' (OGS) bidding instructions for a particular contract on the ground that the criteria constituted "rules" within the meaning of the State Administrative Procedure Act and that, because OGS did not comply with the State Administrative Procedure Act's rulemaking procedures, the bid criteria were unenforceable (see 92 NY2d at 777). The Court concluded,

"OGS was not acting in its quasi-legislative rule-{**87 Misc 3d at 882}making capacity when it decided to include the . . . criteria in its bid advertisement for this project, but rather in its discretionary capacity. Far from setting a general standard of conduct, the withdrawal criteria only purported to cover the bidding for a particular contract" (id. at 779).

The Court further observed, "[n]othing in the record indicates that these same bid withdrawal criteria were required for any and all contract bidding" (id.).

The same is true here. In issuing amendment No. 3, DOH was interpreting and clarifying the minimum eligibility requirements under Social Services Law § 365-f in light of the intent and purpose of the amendments to that statute. And nothing before the court suggests that the challenged criteria in amendment No. 3 are intended for use as a general standard in contract bidding beyond the single, [*8]five-year contract at issue.^[FN4] Based on the foregoing, petitioner's State Administrative Procedure Act argument lacks merit and is, therefore, dismissed.

3. DOH did not violate the separation of powers doctrine or act beyond its authority in issuing amendment No. 3.

Petitioner's third cause of action alleges that DOH engaged in an ultra vires act by adding the explanatory language contained in amendment No. 3 because the additional language conflicts with the minimum criteria set forth under Social Services Law § 365-f. Petitioner asserts that, by relying on the criteria contained in amendment No. 3 to disqualify its bid, DOH committed an error of law, acted arbitrarily and capriciously, and abused its discretion{**87 Misc 3d at 883}. Petitioner's fourth cause of action alleges that DOH violated the New York State Constitution's separation of powers doctrine and committed an error of law, acted arbitrarily and capriciously, and abused its discretion by adding the additional language concerning "statewide basis in at least one other state" because the power to define that phrase was solely with the legislature. State respondents counter that the additional language contained in amendment No. 3 is supported by a rational basis. In addition, State respondents argue that the additional language contained in amendment No. 3 is consistent with the statute's minimum requirements.

" 'The constitutional principle of separation of powers requires that the [L]egislature make the critical policy decisions, while the executive branch's responsibility is to implement those policies. The branches of government cannot always be neatly divided, however, and common sense must be applied when reviewing a separation of powers challenge. As long as the [L]egislature makes the basic policy choices, the legislation need not be detailed or precise as to the agency's role' " (Matter of Dry Harbor Nursing Home v Zucker, 175 AD3d 770, 772-773 [3d Dept 2019], lv denied in part & dismissed in part 35 NY3d 984 [2020], quoting Greater N.Y. Taxi Assn. v New York City Taxi & Limousine Commn., 25 NY3d 600, 608-609 [2015]).

In passing the amendment to Social Services Law § 365-f, the legislature expressly conferred upon DOH the authority to engage in the procurement process for obtaining the SFI contract and exempted DOH from the requirements of State Finance Law §§ 112 and 163 and Economic Development Law § 142 (see Social Services Law § 365-f [4-a] [b] [i]-[iii]). The legislature provided the "minimum" criteria for eligibility, and expressly conferred DOH the authority to set forth eligibility requirements in addition to the criteria set forth in the statute (id. § 365-f [4-a] [b] [i] [B]). Accordingly, DOH was authorized to establish eligibility requirements in addition to the criteria set forth in the statute, provided that such further criteria were consistent with the [*9]statutory minimums.

In any event, the additional language set forth in amendment No. 3 did not add further eligibility requirements, it merely clarified the phrase "statewide basis in at least one other state" in response to the many inquiries submitted during the question-and-answer process (see NYSCEF Doc No. 114 ¶ 33 [Bassiri affirmation]). Regardless, the challenged language in amendment No. 3 is entirely consistent with the minimum statutory requirements and supported by a rational basis.{**87 Misc 3d at 884} Amendment No. 3 simply explained that the phrase "statewide basis in at least one other state"—which is included in the minimum statutory criteria and the original RFP—"means that the entity is currently engaged in a contract with the single State agency established or designated to administer or supervise the administration of the State's Medicaid program in a state other than New York, to be a provider of fiscal intermediary services throughout the entire geographic area of the subject state" (NYSCEF Doc No. 76 at 3). Petitioner fails to provide any meaningful explanation as to how this language conflicts with the statutory minimum requirements.

Moreover, amendment No. 3's clarification of the phrase "statewide basis in at least one other state" is supported by a rational basis. It qualifies the phrase to require that the successful bidder would be capable of providing the required services throughout the entirety of New York State without the need to expend the time and capital to build out the necessary infrastructure from whole cloth. It also clarifies that the successful bidder must have an established ability to perform such services pursuant to a contract with the other state's agency responsible for administering its Medicaid program. These are precisely the functions contemplated in the statutory minimum criteria as well as the aims of the CDPAP amendment with respect to the SFI.

Petitioner has not established that DOH engaged in ultra vires conduct or violated the separation of powers doctrine when it issued amendment No. 3. Nor has it established that the bid criteria were inconsistent with the statute or otherwise irrational (see Save Our Consumer Directed Home Care Program, Inc. v New York State Dept. of Health, 86 Misc 3d 987 [Sup Ct, Albany County 2025, Ferreira, J.] [finding no likelihood of success on merits on similar arguments regarding the new CDPAP regimen]; Corning Council for Assistance & Info. for the Disabled, Inc. v McDonald, 2024 NY Slip Op 34709[U] [Sup Ct, Albany County 2024, Joyce, J.] [same]). Accordingly, petitioner's third and fourth causes of action are devoid of merit and are, therefore, dismissed.^[FN5]{**87 Misc 3d at 885}

4. Petitioner's procedural due process rights were not violated.

Petitioner's fifth cause of action alleges that DOH violated its procedural due process rights under the New York State and Federal Constitutions by disqualifying its proposal based on the language of amendment No. 3 without providing for an avenue to administratively challenge the disqualification. Petitioner contends that it was deprived of a protected liberty interest to contract and engage in its chosen occupation. State respondents argue that CPLR article 78 [*10]procedure affords petitioner sufficient procedural due process and that petitioner has no vested property interest or contract right in continued participation in the Medicaid program.

Saving an excursus on procedural due process, petitioner's argument is without merit. Petitioner explicitly relies on the mistaken premise that previously providing FI services and submitting a bid for the SFI contract afforded it a protected liberty interest. It has no such constitutionally protected interest. The entire existence of FIs or a single SFI is a creation of New York's Medicaid-funded CDPAP program. Such entities provide services in the CDPAP program in exchange for Medicaid reimbursement subject to a complex and changeable regulatory environment. Though the court is mindful of the financial consequences of this migration to an SFI model, petitioner simply lacks a constitutionally protected interest in continuing its work as one of many FIs in the CDPAP.

This reality is the crux of several federal district court opinions rejecting Due Process Clause and related constitutional challenges raised by FIs to New York's 2024 CDPAP amendment and implementation. The United States District Court for the Eastern District expressly held, "[A] Medicaid provider has no property right to continued enrollment as a qualified provider" (Jeannot v New York State, 762 F Supp 3d 217, 239 [ED NY, Jan. 13, 2025, No. 24-CV-05896 (HG), Gonzalez, J.] [rejecting FI's procedural due process challenge to the amended CDPAP statute on the ground that it had no "constitutionally protected property interest (under) the relevant section of the Medicaid Act"] [internal quotation marks omitted]). The District Court for the Southern District cited Jeannot's procedural due process rationale in rejecting an FI plaintiff's substantive due process claim (see Principle Homecare, LLC v McDonald, 2025 WL 622876, *16-17, 2025 US Dist LEXIS 34854, *43-48 [SD NY, Feb. 26, 2025, No. 24-CV-07071, Garnett,{**87 Misc 3d at 886} J.]).^[FN6] In the same case, the Southern District rejected challenges brought under the related Contracts and Takings Clauses of the Constitution (see Principle Homecare, LLC, 2025 WL 622876, *7-12, *15-16, 2025 US Dist LEXIS 34854, *16-33, *41-44). And the United States District Court for the Western District of New York, for similar reasons, found no likelihood of success on an FI's challenges under the Due Process, Contracts, and Takings Clauses to the 2024 CDPAP amendment and its implementation (see Glidedowan, LLC v New York State Dept. of Health, 768 F Supp 3d 503, 519-524 [WD NY, Mar. 3, 2025, No. 6:24-CV-06731 EAW, Wolford, J.]). Whether couched as a due process liberty interest or a property interest, or as a challenge under the Contracts Clause or Takings Clause, petitioner's challenge cannot succeed.

Petitioner's reliance on Matter of LaCorte Elec. Constr. & Maintenance v County of Rensselaer (152 Misc 2d 70 [Sup Ct, Rensselaer County 1991]) is misplaced. Unlike the situation in Matter of LaCorte where the would-be bid winner satisfied all eligibility requirements and won the bid but was denied the contract on ground of responsibility, petitioner here was deemed ineligible in the first instance for failing to meet the minimum criteria.

Finally, to the extent that petitioner was entitled to any due process during the bid procedures, there has been no violation here. "Due process is flexible and is determined by a [*11]weighing of the interests at stake, the risk of erroneous deprivation, the probable value of additional safeguards and the cost of substitute procedures" (Matter of Schiavone Constr. Co. v Larocca, 117 AD2d 440, 443 [3d Dept 1986]; Mathews v Eldridge, 424 US 319, 335 [1976]). Petitioner's interest as an ineligible bidder is minimal and affording additional safeguards beyond seeking redress in an article 78 proceeding is unwarranted and the cost of affording further administrative review is high.

On the other hand, the interest of the State and DOH in advancing the revised CDPAP scheme expeditiously is significant and the transition requires careful planning and coordination. The legislature chose to amend CDPAP to save costs and{**87 Misc 3d at 887} to provide greater oversight for services impacting a vulnerable population and chose to do so within approximately one year of the legislature amending Social Services Law § 365-f. Holding up the transition to afford all rejected and/or ineligible bidders further administrative review would result in costly delays and negatively impact services to vulnerable consumers.

Based on the foregoing, petitioner has not established a procedural due process violation.

D. All additional relief requested in the petition/complaint is denied as moot.

Having dismissed petitioner's causes of action as without merit, petitioner's request for discovery and attorneys' fees and costs is dismissed as moot.

Based on the foregoing, the relief requested in the amended verified petition/complaint is denied and the proceeding is dismissed. The parties' remaining arguments, to the extent not specifically addressed above, have been considered and found to be unpersuasive, without merit, or rendered academic.

It is hereby ordered that respondents' motions to dismiss the amended petition/complaint (mot Nos. 2, 3) are granted as set forth herein; and it is further ordered, adjudged, and declared that Social Services Law § 365-f, as amended by part HH of section 1 of chapter 57 of the Laws of 2024, does not violate article III, § 17 of the New York State Constitution; and it is further ordered and adjudged that the relief requested in the petition/complaint is otherwise denied, and the proceeding/action is otherwise dismissed.